Businessday 25 jun 2018 by BusinessDay

news you can trust I **MONDAY 25 JUNE 2018 I vol. 15, no 82 I N300

Nigeria’s rising debt fails to boost economic growth

See commodities on page 2

Diamond, FBNH eurobonds outperform as EM rout reaches Nigeria Emeka Ucheaga

LOLADE AKINMURELE, DAMILARE ASIMIYU & DAVID IBIDAPO

urobonds issued by Diamond bank and First bank are the best performing Eurobonds this year among dollar denominated corporate bonds raised by Nigerian Banks. Coincidentally, these same bonds are among the riskiest Eurobonds in Nigeria based on their credit rating of B- and CCC for Diamond and FBN respectively.

igeria’s total debt has almost doubled in three years from N12.6 tr illion in December 2015 to N22.71 trillion as at March 2018, according to the Debt Management Office (DMO), however growth in Africa’s largest economy has failed to match counter cyclical spending, designed to stimulate an economy in recession. The Federal Government has

Diamond bank Eurobond which matures in 2019 has returned 4.33 percent year to date while First

Continues on page 41

Inside Dangote Cement to issue up to N150bn Commercial Paper P. 2 PENCOM shakes up industry with revised fee structure P. 2 Heritage Bank rewards performance ...promotes over 350 staff P. 20

World Cup Result England 6 - Panama 1 2 - Senegal 2 Japan Colombia 3 - Poland 0

Oshiomhole inaugurated as APC National Chair, resumes work today James Kwen & OWEDE AGBAJILEKE Abuja

…Swears in other officials …PDP urges him to submit to EFCC

dams Oshiomhole was yesterday inaugurated as the National Chairman of the ruling All Progressives Congress, APC at the end of the party’s National

C o nv e n t i o n h e l d a t E a g l e s Square, Abuja. Oshiomhole was sworn in by Abubakar Malami, Attorney General of the Federation and Minister of Justice following a

motion moved by Ibrahim Manusa, a delegate from Jigawa State dissolving the John Oyegun led National leadership of APC. The new APC National Chairman was

Continues on page 41 Oshiomhole

businessday market monitor Commodities

NSE

Brent Oil

Biggest Gainer

$75.48

OKOMUOIL N94.20

Cocoa

US $2,514.00

Biggest Loser

2.75pc

Everdon Bureau De Change

Bitcoin DANGCEM N225.00

37,862.53

-2.30 pc

₦2,414,819.83

+0.49pc

Buy

Sell

$-N 359.00 362.00 £-N 474.00 482.00 €-N 414.00 422.00

BUSINESS DAY

INSIGHT

May & Baker’s MOU with NIPRD set to lift drug maker

...to commence production latest Q1 2019

Cynthia Ikwuetoghu

igeria’s first pharmaceutical company, May & Baker Nigeria Plc last week signed a Memorandum of Understanding (MOU) with the National Institute for Pharmaceutical Research and Development (NIPRD), for the Production and commercialisation of Niprisan which is a treatment for sickle cell patients in Nigeria. “Our target initially is to commence production at the NIPRID facility before the end of this year or latest by first quarter, 2019 to enable Nigerians, especially the patients have access to the drug, along with its benefits,” Valentine Okelu, executive director of May & Bakers Nigerian Plc told BusinessDay. Businessday investigations showed the deal will help cut down health expenses for sickle cell patients in Nigeria who have longed suffered in years past due to high cost and inaccessibility of sickle cells drugs in the country. Figures from Nigeria based Sickle Cell Foundation showed that in Nigeria over 40 million Nigerians are healthy carriers of the sickle cell gene, while each year over 150,000 babies are born with symptomatic

sickle cell anaemia (Hb SS). Ayodeji Ebo, managing director of Afri-invest securities limited said the deal will definitely boost the revenue of May & Baker, increase their capacity and will also make the firm more attractive to investors. An investigation by Businessday into the financial report of May & Baker Plc indicated that over 70 percent of its revenue comes from pharmaceuticals, and less than 1 percent from beverages. The revenue of the company has been on the increase over the years from 2013 to 2017 from N6.37 billion to N9.35 billion respectively. However, Ebo noted that the government owned NIPRD should honour their terms of agreement with May& Baker in other to encourage private investors and boost investors’ confidence in government. “The general public especially investors will be cautious of whether the government will honour their agreement or not,” Ebo told BusinessDay by Phone. Uche Olekanma, nature care business manager of May & Baker said Niprisan is used in the management of sickle cell diseases and it’s also multifaceted.

FMDQ Close Foreign Exchange Market

fgn bonds

Treasury Bills

Spot $/N

I&E FX Window 361.00 CBN Official Rate 305.80

3M -0.39 12.51

5 Years

10 Years

20 Years

-0.15 13.17

0.53% 13.68%

0.00% 13.57%

0.03% 13.80%

C002D5556

Monday 25 June 2018

Dangote Cement to issue up to N150bn Commercial Paper Cynthia Ikwuetoghu, Oghogho Edosomwan & Abdullateef Eniola-Giwa

ub-Sahara Africa’s largest cement producer Dangote Cement has filed a shelf programme to issue up to N150 billion in commercial paper with an initial issuance of N50 billion. The tenor for the initial issuance is 180 to 270 days and the offer opens on the 22nd of June and closes on the 26th of June 2018. Date of allotment for this commercial paper is 26th of June with a funding date of 27th of June. The minimum investment is N5 million and multiples of N1000 thereafter. Commercial Papers are shortterm debt financing securities (no longer than 270 days in tenor) consisting of unsecured and discounted promissory notes issued

by large corporations with good credit ratings, which can be readily traded. Due to their relatively short maturity period, commercial papers are referred to as low-risk investments, offering competitive returns to investors in compensation for the issuer’s credit risk. Dangote Cement is rated Aaa by Moody’s for local currency issuances. The company explained that the proceeds of the commercial paper would fund short term working capital requirements and for general corporate purposes after which it will be listed on the FMDQ OTC exchange. Dangote has built a strong leadership position in Nigeria with a market share of 67 percent. Dangote cement has 45.6Mta capacity across 10 countries and with a market capitalisation of N4.073 trillion. Revenue of the company grew

by 31 percent from N615.1 billion at the end of 2016 to N805.6 billion as at full year (FY) 2017. Net income also increased by 43 percent from N142.9 billion to N204.2 billion. For first quarter, 2018 results, the company’s revenue was up by 16.3 percent from approximately N208.2 billion in 2017 to N242.1 billion in 2018. Earnings before interest, tax, depreciation and amortisation (EBITDA) also increased by 22.2 percent from N103 billion to N 125.9 billion with gross margins of 52.0 percent in 2018 first quarter. EBITDA margins grew from 41.8 percent in 2016 to 48.2 percent in 2017 despite recent macroeconomic slowdown in Nigeria. Over the past five years, Dangote cement has invested over N726billion whilst maintaining net debt to EBITDA at or below 1.05x.

Continues on wwwbusinessday online

PENCOM shakes up industry with revised fee structure Endurance Okafor

he revised fee structure by the National Pension Commission (PENCOM) which pension operators will charge funds under management is seen by analysts as a positive move for the industry. Five analysts surveyed by BusinessDay expect the reduced fees structure to move Nigeria’s pension industry towards cost efficiency level, optimization of income of asset under management (AuM) and increase the return on the pension assets. Johnson Chukwu, MD of Cowry Asset said it is an inevitable direction the industry has to go because at some point every industry will go towards cost optimization. “It is a good move for the industry; the industry has to move towards cost efficiency level and optimization of income of asset under management. The industry has actually increased materially, so at this point, as the income per naira of asset under management is going down operators have to compensate for it by increasing or expanding their asset under management,”Chukwu said in a phone response. The opinion of Ayo Akinwunmi,

Head of Research at FSDH Merchant Bank was not different as he said the reduction in the fees that the pension operators will charge the fund under management is positive for the industry. “The pension assets have grown substantially since inception to justify the reduction in the fees. I also believe that the pension assets will continue to grow into the future. Thus the income the pension operators will earn should increase with higher level of pension assets,” Akinwunmi told BusinessDay in a mail response. The fee structure for Nigeria pension industry was revised by the National Pension Commission (PENCOM), and it is valid for the period between 2018-2020, as compiled from the commission’s statement, released on Thursday, 21 June 2018. The revised fee structure which will be effective from 1st of July, 2018 cover charges by the commission, Pension Fund Administrators (PFAs), Pension Fund Custodian (PFCs) and the commission itself. According to BusinessDay survey, the 2018 new fee structure follows the last revised fee by the commission in March 2009. Continues on wwwbusinessday online

L-R: Kayode Pitan, MD/CEO, Bank of Industry (BoI); Vice President Yemi Osinbajo; Oluwatoyin Ogundipe, vice chancellor, University of Lagos (UNILAG), and Herbert Wigwe, GMD/CEO, Access Bank plc, during the official launch of the Student Innovation Challenge 2018 in Lagos, at the weekend. Pic by Olawale Amoo

Why OPEC agreed to boost production despite rancour among cartel DIPO OLADEHINDE & ABDULLATEEF ENIOLA-

he spirit of cooperation and compromised prevailed in what some analysts expected to be one of “the worst OPEC meetings” as major oil producing countries agreed to pump more crude to help reduce prices and prevent a supply shortage, in a significant reversal of Organisation of Petroleum Exporting Countries(OPEC) strategy of curbing output over the past 18 months. Ademola Henry team leader at the Facility for Oil Sector Transformation (FOSTER) said the decision to increase output is more of a political decision which countries with higher production will benefit however for Nigeria it’s still some of the same. “We are struggling to get a production level of 1.7 million or 1.8 million, so there is really no benefit for Nigeria except we fix our Petro-

leum Industry Bill (PIB) and Fiscal issues which will address some of the problem we are facing,” Henry told BusinessDay. After a fraught meeting in Vienna in which Iran was initially at odds with a Saudi-led drive to boost production, ministers settled on a target they said would increase output by around 1m barrels per day (bpd). Emmanuel Afimia energy analyst at Afimia consulting services said the decision of OPEC to increase output is a bit ambitious although it shows that US has a stronghold on Saudi Arabia. “I think the US is using Saudi Arabia to create a relationship with Russia,” Afimia told BusinessDay. Afimia also expect the oil price to fall as a result of increase in supply although some countries inability to increase output will make the fall in price moderate. While oil prices have pulled back

from the four-year high above $80 a barrel hit last month, they rose after the deal on Friday by over 2 percent after OPEC made the announcement which is the highest increase under 24 hours. Ayodele Oni an energy partner at Bloomfield Law field said since OPEC is determined to control output prices there will always be a sharp reaction in prices which is what is currently being seen. OPEC faced pressure to increase output from President Donald Trump and big consumers like India after the cost of crude soared to multi-year highs, boosted by strong demand, dwindling output from Venezuela and renewed U.S. sanctions on Iran. “Hope OPEC will increase output substantially. Need to keep prices down,” Donald Trump tweeted immediately after the meeting on Friday. Continues on wwwbusinessday online

Monday 25 June 2018

C002D5556

BUSINESS DAY

C002D5556

Monday 25 June 2018

C002D5556

BUSINESS DAY

C002D5556

Monday 25 June 2018

C002D5556

of politics seen hampering Not Too BUSINESS DAYlaw 7 Young To Run

P. 4

NEWS

in association with

World Cup Result

Nigeria vs. Argentina: Taking our chances key to success – Rohr ANTHONY NLEBEM, Reporting from St. Petersburg

with less days to prepare for the game against the South Americans than they had for the second match against Iceland following the opener against Croatia. There were five days to get ready for Iceland after the loss to Croatia, but three days to prepare for Argentina after the win over Iceland. Argentina have been Nigeria’s perennial Nemesis at the FIFA World Cup. In five previous appearances, the Eagles have had to play Argentina in the group phase on four occasions. It was only in France 1998 that both teams ended up in different sections. Argentina have won all four, though narrowly. And while bookmakers would be quick to emphasise the gulf in class, Argentina won the last of their two FIFA World Cup titles 32 years ago, and current form (determinable only by recent results) does not present Lionel Messi and company as unbeatable. In Russia, their opening 1-1 draw with Iceland was followed by a stunning 3-0 lashing by Croatia in Nizhny Novgorod, meaning the Eagles (who got their campaign back on track with a 2-0 win over Iceland in Volgograd) and the Albiceleste arrive the 67,000 –capacity Zenit Arena on Tuesday via different trajectories.

Sweden 1 - S/ Korea uper Eagles technical adviser/coach, Gernot Rohr, Belgium 3Super- Panama has admitted that the

Eagles must be on the attack against Argentina in Saint Petersburg on Tuesday, and diligently take the chances that come their way against the two-time World Cup winners. “Simply put, we must take even half chances, and be on the offensive as much as possible. Perhaps, a draw could be good to qualify, but we cannot think and play for a draw. Sometimes, when you play for a draw, you get punched in the face late in the day. “It will be a tough game and we must go with a tough mentality from the start to the end,” Rohr said. The Eagles returned to their Sanatorium Istochnik Hotel in Essentuki on Saturday having no illusions that Tuesday’s match will be a piece of cake. In the evening, they saw how reigning world champions Germany came from behind to defeat a Swedish team that had chances to win but apparently played for a draw in Sochi. Nigeria’s army is presented

England 2 - Tunisia

L-R: Aliyu Abdulhameed, managing director, NIRSAL; Atiku Bagudu, governor, Kebbi State and chairman of presidential committee on rice and wheat production in Nigeria, and Bukola Awosanya, group head, agriculture finance, Sterling Bank plc, at the 7th annual ALP seminar in Lagos.

US-China trade war could affect global growth BUNMI BAILEY

he likely trade war that might happen between the world’s two biggest economies (America and China) could lead to damaging economic consequences that could ultimately affect global growth rate. The Organisation for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF) have both issued forecasts expressing confidence in global growth while highlighting a trade war as a major downside risk to their generally still-positive outlooks. Global growth in 2016 and 2017 was 3.2 percent and 3.7 percent, and is projected at 3.8 percent this year and 3.9 percent in 2019, according to OPEC. “If the two largest economies in the world are in a trade war, then we are likely to see the fall out. These two are our largest trading partners. So, if there is a trade war we are going to be caught one way or the other. There might be some advantages and also disadvantages. But globally, the whole world will be affected. The

US economy is worth about $18 trillion and the Chinese economy is about $14 trillion,” Bismarck Rewane, managing director, Financial Derivatives Company, said on phone to BusinessDay. “It will have an impact to us. If global trade is increasing, the global growth rate will also increase, but if global growth is constrained then you are bound to have some problems,” Rewane also added. Analysts have attributed that the likely trade war could affect the demand of crude oil product from Nigeria. According to Johnson Chukwu, CEO, Cowry Asset Management Limited, “If the US and Chinese market slows down because of a trade war, the implication is that the demand for crude oil product will decline, which could affect Nigeria exports.” The foreign trade sector of the Nigerian economy improved further in Q1 2018, as it recorded the best trade performance in the last nine quarters. Total trade improved to N7.2 trillion in Q1 2018 from N3.1 trillion in Q1 2016, and the exports improved to N4.7 trillion in Q1 2018 from N1.4 trillion in Q1 2016, according to the National Bureau of Statis-

tics (NBS) foreign trade report. Foreign trade remains vulnerable to the volatility in the crude oil markets as crude oil exports dominate the exports at 76.3 percent of total exports in Q1 2018, but lower than 83.0 percent in Q4 2017. Nigeria exported N368.3 billion worth of crude oil products to the US in Q1 2018. Nigeria’s major export partners are Netherlands, India, Spain, US and France; contributing 20.5 percent, 18.2 percent, 8.3 percent, 8.2 percent and 6.3 percent, respectively. Major import partners are China, Netherlands, Belgium, US and India; contributing 21.1 percent, 12.1 percent, 10.6 percent, 6.5 percent and 6.3 percent, respectively. “When there is a trade war, the price of goods produced in the local market will increase and consumers are unable to consume as much quantity as they use to. That will lead to a slowdown in the economic activities, and those countries will not be able to export,” Chukwu explained. On June 18, President Donald Trump ordered his administration officials to draft plans for tariffs on a further $200 billion in Chinese imports if

Beijing follows through on its threat to retaliate against US duties on imports announced last week. The tariffs announced last week, which are due to take effect in early July, would affect a combined $100 billion worth of trade between the world’s two largest economies. China and the US have both already imposed tariffs on steel, aluminium and some agricultural goods. Trade experts say there are plenty of ways beyond tariffs that the Chinese government could retaliate — including slowing approvals for acquisitions made by American companies or stalling products at its ports, and US in the next stage would restrict Chinese investment into America. “This escalation would be damaging for the US and Chinese economies since global companies, such as Apple, invest in both countries. This would affect not only US businesses but also American consumers. Retailers such as Walmart import goods from China, so prices would go up and living standards would be squeezed,” Linda Yeuh, adjunct professor of Economics, London School of Economics, said.

Bayelsa accuses banks of collusion in payroll fraud SAMUEL ESE, Yenagoa

ayelsa State government has alleged that some financial institutions operating in the state are colluding with payroll fraudsters in the civil service to defraud the state thereby promoting ghost worker syndrome and other unethical practices. Commissioner for information and orientation, Daniel Iworiso-Markson, made the allegation last week at a town hall meeting in Nembe Local Government Area, in continuation of efforts to drum support for ongoing public sector reforms. Iworiso-Markson disclosed that Governor Henry Seriake Dickson administration inherited a gratuity obligation of N20 billion, stressing that the ugly prac-

tice had robbed the state of huge amounts of money over the years. He, however, reassured pensioners of state commitment to their welfare as the present administration was working assiduously to address the unwholesome act through the ongoing reforms. Stakeholders in the area, in their goodwill messages, thanked Governor Dickson for summoning the courage to embark on the reforms and urged him to revert to the former system of supervisory payment of salaries in order to curb fraud in the state public service. They identified the current bank alert system of salary payment as a major cause of absenteeism, multiple employments, ghost worker syndrome and other anomalies bedevilling the state public

service. While acknowledging the successes recorded so far especially in the area of reduction of wage bills both at state and local governments levels, Senator Nimi BarighaAmange encouraged Governor Dickson to downsize the state workforce from its current 28,000 to 10,000. A retired school principal, Dauerigha Opuene, in her contribution, appealed to the state government to look inwards pointing out that most of the fraudulent acts are perpetrated through a well orchestrated collusion between a few public servants and top government officials. Earlier in his address, the Caretaker Committee Chairman, Beifie Fibereseimo enumerated the benefits of the reforms to include a monthly saving of N25 million and

reduction of the monthly wage bill from N127 million in October last year to N102 million. While responding to issues raised by the local chapters of National Union of Local Government Employees (NULGE), Medical and Health Workers Union of Nigeria (MHWUN) and Nigeria Union of Teachers (NUT), the Commissioner for Education, Jonathan Obuebite stated that Bayelsa ranks among the few states with large workforce in the education sector. Obuebite disclosed that the primary school staff stood at 9,315 with a monthly wage bill of N581 million while paying N611 million to 6078 secondary school workers just as 60 percent of staff of primary and secondary schools were non-academic, but decried the high rate of absenteeism.

0 1

Star lager cheers Nigeria to victory at Super Eagles Dome centre

n Friday, June 22, 2018, football fans thronged the Super Eagles Dome in Surulere, Lagos, to cheer on the Nigerian national football team as they faceoff Iceland in Volgograd Stadium, Russia. As the official beer of the Nigerian Super Eagles, Star Lager took their support for the national team a notch higher, with the set up of a state-of-the-art football experience venue for passionate football fans. The Super Eagles Dome featuresatunnelshowcasingtheglorious history of the Super Eagles on LED, plus high-tech and multimedia technology that gives a 360-degreeexperience,aVIPloungeanda ministudiowherefootballlegends Ben Iroha, Ike Shorunmu, Uche Alozie Okechukwu and Tijani Babangida discuss the game and

analyse the performance of the Super Eagles moderated by sports journalist, Steve Dede. The dome also hosted artistes M.I and Small Doctor alongside DJ Big N, who entertained music lovers with their hit songs during the after-party. The ecstatic fans that already had a wonderful evening watching the Super Eagles beat Iceland through an Ahmed Musa brace also enjoyed winning several gift items courtesy of Star Lager Beer at the dome. Speaking at the venue, Abayomi Abidakun, senior brand manager, Star Lager Beer, Nigerian Breweries Plc, said, “Star Lager as proud supporters of the national team has set up a meeting point where fans of like minds can come and show their love and support for the Super Eagles notwithstanding the scoreline.”

Hero lager beer charges Super Eagles following victory over Iceland

ollowing the heroic display of the Super Eagles in putting Iceland to the sword in the ongoingWorldCupGroupDMatch day two in Volgograd, International Breweries,partoftheworld’slargest brewer,Anheuser-BuschInBev,(AB InBev) has congratulated the team andunveiledthebiggestmessageof support to Nigeria’s national team. The message, “BE FEARLESS” wascreatedusing2,000peopleand unveiledattheKing’sCourtyard,Ikpeazu Stadium, Onitsha, Anambra State, on June 16, 2018. Arne Rust, marketing director, International Breweries plc, said, “Hero lager exists to inspire, equip and showcase the true potential of everyNigerian.”Heopinedthatduring the qualifiers for the World Cup, alotofNigeriansdidnotbelievethat the Nigerian team would qualify, but at the end, they did qualify for the competition with a match left to play. “We want the Nigerian Team

to know that they have our support and we hope for the very best from the team. The crop of players that made up the USA ‘94 squad is believedtohavelaidthefoundation of our current players, thanks to their tenacity, passion and courage. NigeriahasneverlackedtheHeroes orthehopethatwecanandwillone daywintheWorldCup.Gomakeus proud,” he said. In April 1994, Nigeria was ranked fifth in the Fédération Internationale de Football Association (FIFA) rankings, the highest FIFA ranking position ever achieved by an African national football team. The national team has qualified for six of the last seven FIFA World Cup tournaments since their first appearance at the 1994 mundial in the United States. Our national team is also the onlyAfricanteamtoqualifyforboth the 2014 and 2018 editions. Nigeria has won the Africa Cup of Nations thrice,withourlasttitlein2013,after defeating Burkina Faso in the final.

Monday 25 June 2018 8 BUSINESS DAY NEWS FG to borrow N1.643trn to finance 2018 budget deficit C002D5556

… projects N305bn from tax amnesty … OPS foresees poor budgetary implementation, low investor confidence HARRISON EDEH & CYNTHIA EGBOBOH, Abuja

s contained in the appropriation bill signed by President Buhari on Wednesday, the Federal Government will now borrow N1.643 trillion to partly finance the N1.950 trillion budget deficit in 2018, indicating some N56 billion less than what was earlier proposed by the executive. Out of this sum, government hopes to borrow N793 billion from domestic sources and N849 billion from foreign sources. In the budget he presented last November, the president had proposed a total deficit or N2.005 trillion, to be partly financed by new borrowings estimated at N1.699 trillion. Giving a breakdown of the budget, which was signed by the president, Udoma Udo Udoma, minister of budget and National Planning said on Thursday in Abuja that the deficit will also be partly financed by N306 billion expected from privatisation proceeds as well as N5 billion from sale of other government property. The 2018 budget termed that of consolidation seeks to continue the reflationary policies of the 2016 and 2017 budgets, which helped put the economy back on the path of growth. The budget targets a total expenditure of N9.12 trillion broken down to N530 billion statutory transfer, N2,014 trillion for debt servicing, N3.51 trillion recurrent (non-debt) spending with a 17 percent increase from N2.99 trillion in 2017. There is also an estimated 7% increase in provision to retire maturing bond to local contractors from N177 billion in Fiscal Year 2017 to N190 billion in view of the ambitious plan to liquidate all contractor arrears of the FGN going back to several years. “We plan to continue to spend more on ongoing infrastructure projects that have potentials for job creation and inclusive growth. We will continue to leverage private capital and counterpart funding for the delivery of infrastructure projects,” Udoma stated. But in the face of low revenues, which have been a key challenge to implementing national budgets, Udoma said government has embarked on some key reform initiatives to improve earnings. Some of those include new funding mechanism for JV operations, allowing for Cost Recovery in lieu of previous cash call arrangement: Additional oil-related revenue including: Royalty Recovery, New/Marginal Field Licences, Early licensing, renewals; review of the fiscal regime for Oil Production Sharing Contracts (PSCs). Government also plans to restructure its equity in JV oil assets, with proceeds to be reinvested in other assets, and has already announced increase in Excise duty rates on alcohol and tobacco. The government hopes that looking beyond the oil sector which account for 41 percent of the total revenue projected, the budget would be funded by N31.25 billion from the Share of Dividend (NLNG); N1.17 bil-

lion Share of Minerals & Mining; N1,248.709 trillion non-oil funding; N847.95 from independent revenue; N27.22 billion FGN share of actual balance in special accounts. The government also projects that its tax amnesty program – the Voluntary Assets and Income Declaration Scheme (VAIDS) would yield a total amount of N305 billion in 2018 out of which the federal government expects to receive about N80 billion through the scheme. Udoma explained that the federal government’s 2017 unspent balance will account for N250 billion funding for the

budget; FGN signature bonus account for N114.30 billion; Domestic recoveries, assets and fines will account for N374 billion; Earmarked funds at N710 billion; Grants and donor N199.92 billion; and other FGN recoveries N138.44 billion. Meanwhile, key members of the Organised Private Sector foresee that the 2018 would be poorly implemented considering its late passage a few months into an election year. Some of them who spoke to BusinessDay are particularly concerned that the implementation is going to be a lot difficult, which could prompt the Executive not

to cash back many items in the appropriation Act because of poor collaboration in the budget. Also, Eze Onyekpere, Lead Director, Centre for Social Justice, told BusinessDay that, “The President’s speech has raised a poser; did the executive and legislature not agree on the amount to be invested in constituency projects? If they did not agree; why? If they agreed, did the legislature exceed the agreement? The institutional approach of not spending resources too thin as proposed in the Projects Implementation remain a source of worry. ”Is anyone learning from

what happened in 2018 to start the 2019 process on time? Repeating the same experiment, year after year, without altering any of the conditions and variables and expecting different results is the classical definition of insanity,” Eze remarked. Tony Ejinkonye the immediate Past President of Abuja Chamber of Commerce Mines and Industry, ABUCCI told BusinessDay that apart from fears on poor implementation of the budget, investors’ confidence islikely to drop on account of the frequent face-off between the executive and the legislature. He said, “Investor confidence

in the system is going to drop hugely, and you know it is very important and strategic for us, especially now we are seeking for investors and private sectors to play bring in about 80% into the Economic Recovery and Growth Plan, ERGP.” Also, Celestine Okeke, Lead Partner, Small and Micro Medium Enterprise Development of Nigeria, told BusinessDay that the most painful aspect of the insertions by the National Assembly is picking up from most critical infrastructure to a far less important projects. “It does not encourage facilitation of long term project financing.

Monday 25 June 2018

C002D5556

BUSINESS DAY

C002D5556

COMMENT

Monday 25 June 2018

comment is free

Send 800word comments to comment@businessdayonline.com

The Dr. J.K. Randle colloquium BASHORUN J.K RANDLE Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

• Continued from last week

r. Sam Amuka [“Sad Sam”] Publisher of “Vanguard” newspaper weighed in with the devastating front page headline: “Bank managing director who bought 134 buses, 20 houses with N11.4 billion slush fund arrested by EFCC.” The audience were so shocked and incredulous that they pleaded that unless the report was supported with more facts and figures that they would not buy it. Being a veteran journalist (the vintage generation of Peter Enahoro; Alhaji Alade Odunewu; Chief Augustine Ayo; Chief Peter Osugo; Alhaji Mamam Daura; Mrs. Omobola Onajide; Dr. Haroun Adamu; Gbolabo Ogunsanwo; Mrs. Theresa Ogunbiyi etc.), “Sad Sam” opted for diligent pursuit of accuracy and integrity. He withheld publication until April 13, 2018. In the meantime, vanguard released as its front page headline: “I’ve made over N100 million from kidnapping, says herdsman (Murtala Umaru ) in Edo” Confirmation was provided by “The Nation” newspaper which also carried it on its front page with a slightly different headline: “We made over N100 million from kidnapping,

says herdsman” “A herdsman, who the police claimed has been to prison several times, has said his gang made over N100 million from kidnapping. An AK47 rifle with breech number KO340119 and 10 rounds of 7.62mm ammunition were recovered from him. The herdsman, whose name was given as Muritala Umaru, was said to have been responsible for kidnapping in parts of Edo and neighbouring states. He sang like a canary when he was paraded before reporters at the police headquarters. Umaru said he became a kidnapper four years ago in Okenne, Kogi State and had participated in several kidnapping across Edo State. He said he had cattle, adding that his gang had 10 AK47 rifles with which they carried out kidnapping. He said it was somebody he described as a ‘Chief’ from an Edo community who gave them identities of their victims. The kidnapper said they realised N10 million from one of their victims, pledging to cooperate with the police. On what happened to some of their victims, he said it was his boss that was responsible for the killing of victims who refused to cooperate. Umaru said: “I am married. I stay in Auchi, but I was born in Lokoja. I am into kidnapping. I have been a kidnapper for four years. I started in Lokoja. I have kidnapped over 50 persons. We kidnapped them when they were travelling. One man gave us target. I collected N3 million in our last operation. It is my boss that kills people. He had killed many people. We operate in Auchi, Ekpoma, Okenne and other

I have been a kidnapper for four years. I started in Lokoja. I have kidnapped over 50 persons. We kidnapped them when they were travelling places. Police Commissioner Babatunde Kokumo described Umaru as a kidnapper who disguised as a herder. “The man has been in an out of prison. He has kidnapped in Edo and other states. The prison official he kidnapped identified him.” A welder, who was on Monday rescued from the kidnappers’ den at Afuze in Owan East Local Government, Mr. Idirisu Mohammed, has identified a herdsman, Abubakar Ilyasu, as one of his abductors. He said he was rescued before Abubakar returned. His words: “I am 51 years old. I am a farmer and a welder. On Monday morning, I was taking my workers to the farm. At Warrake road near Afuze, I saw herdsmen come out of the bush. They had guns. They collected our phones and used cutlass to attack us. They took us to the bush. It was a vigilance group, hunters and police who rescued me. They ran away and abandoned me when the rescued team shot at them. This one that was nabbed was sent to buy food. Before he returned, the rescued team arrived and the food was with him.” Abubakar said he left his cattle to buy food when he was arrested.”

Matters took a dramatic turn when Dr. Orji Uzo Kalu, the former Governor of Abia State and Publisher of “Daily Sun” newspaper rose to his feet to deliver his endorsement of the front page editorial of his paper. Headline: “The Lagos land use charge controversy” “The public outcry that greeted the Lagos State government new Land Use Charge (LUC) is quite understandable. The increase, which was considered astronomical, came at a wrong time. Although the increase is believed to shore up revenue for infrastructural development of the state, the matter can still be revisited. The drive by successive administrations to give Lagos a befitting status of a megacity is well known but it must be done gradually. While announcing a downward review of the charge, the state Commissioner for Finance, Mr. Akinyemi Ashade, explained that the new charge was imposed because of the state’s desire “to build world-class infrastructure and improve the well-being of its citizens.” The new charge, said to be as high as 400 per cent in some cases, affects all property owners across the state. Properties used for wholly commercial purposes attracted the highest percentage increase, while efforts were made to make concessions to the aged, pensioners and physically-challenged persons that own property in the state. The government was highly criticised for introducing the high land charge at this period when the economy is struggling. In fact, the new Land Use Charge Law 2018 would most probably go down as the most controversial law the Lagos State government has enacted in recent time.

Various interest groups, including the Ikeja Branch of the Nigerian Bar Association (NBA) and the Lagos Chapter of the Manufacturers Association of Nigeria (MAN) embarked on mass protests against the new law. This resulted in a capitulation on the part of the state government but which many stakeholders still believe is not far enough. They want a return to the old regime of Land Use Charge. In the bid to appease agitated Lagosians, the state government announced a downward review of the Land Use Charge by 50 per cent on commercial property owners. The reduction came on the heels of public outcry against the new charge and government’s intervention on the matter after a prolonged session at the State Executive Council presided over by the state governor, Akinwunmi Ambode. In the same vein, properties occupied by owners and third parties in the same premises but used for commercial and manufacturing purposes would enjoy a 25 per cent discount while owneroccupier properties would get a 15 per cent discount on the earlier announced rates. Government also explained that a commercial property valued at N20 million, which was earlier meant to pay N91,200 would now pay N45,600 per annum. In the second category, a N20 million property expected to pay N30,720 will now pay N23,040 per annum, while in the third owner-occupier category, the charge on the same N20 million valued property would now be N7,752 per annum instead of N9,120 initially proposed.

Send reactions to: comment@businessdayonline.com

Nigeria’s budget crisis & unending horizons

OLUSEUN ONIGBINDE Oluseun Onigbinde is the Lead Partner of BudgIT, a civic organization that holds government to account.

resident Muhammadu Buhari signed the 2018 Budget on 20 June 2018, exactly 224 days after the budget was presented to the National Assembly. That it takes seven months to pass critical legislation that allocates public resources begs the question if Nigeria really is a serious country worth the nowless-used moniker “giant of Africa.” Both arms of government share any and all blame, as the National Assembly remarked that the heads of Ministries, Departments and Agencies (MDAs) failed to appear for the budget hearings and it took a clear message from the President to compel them to undertake what should ordinarily be their professional and moral obligation. The good news is, willy-nilly, we

have the 2018 budget passed. The unfortunate reality is that this has come with certain scary adjustments that expose a smattering of insensitivity within our political class. It is unfortunate that the National Assembly does not seem to realise the weight of its place in the Nigerian democracy system. Rather than carry itself in dignity, the Assembly’s affinity for personal aggrandizement has always overstepped the great good that it is meant to deliver to Nigerians. Honestly, the biggest argument against the National Assembly is its lack of awareness of its basic functions and the gross indiscipline it cannot seem to grow out of, like the spots on a leopard. In a country where teaching hospitals hardly receive N15bn of public funds, how does the National Assembly justify allocating lawmakers N125bn, as appropriated in 2017? Rather than reduce profligacy and its semblance, the National Assembly chose to take the tonedeaf action of jacking up its budget by N14.5bn, for 2018. In plain terms, your lawmakers did not only raise their budget, they severely cut allocations meant for education, health and public infrastructure. This demands our collective, civil outrage because in a country still wet from

the waves of recessions, this isn’t justifiable, by any means. There has been a lot of contention on how far the National Assembly can, and should go, in adjusting Nigeria’s budgets. Can it reduce or increase allocations for line items? Can it add new projects and vote funds for it? I think it is time the Executive seeks definite answers from the Supreme Court on this, and speedily too. In my view, the legislature has a right to tamper with the budget to any length, as it is indeed a piece of legislation, and under their purview. However, there are rules and democratic norms - implicit attitudes and values that make democracies function. Because the National Assembly can tamper with the budget does not mean it can go ahead and add over 6,000 projects as has been done. Unless detailed reasons, cost analyses and public debates foreshadowed these decisions, what we are seeing is a preposterous and outright abuse of power. Beyond legal actions, there are other ways to resolve this perennial problem. Nigeria’s style of government is quite similar to US Presidential system and unfortunately, the US isn’t doing well too, as regards Executive-Legislature partnership when it comes to the budget. The US legislature entirely writes the budget, as the president’s

estimates are only taken as his guide for the administration. If Nigeria falls into the same pit of legislative antics affecting budget timelines and content, the consequences our economy would face would outweigh the US economy, mainly because our level of development is at great divergence to the US. This budget imbroglio is often the hallmark of presidential systems. In the parliamentary system run by the British, the budget is a reflection of the party manifesto and its allies. Ideally, the budget does not exist in isolation; it is the product of a defined policy direction. Here, it is easy for the budget to be drawn from the party’s agenda not the Prime Ministers’ short-term thinking. Now, think of Western Nigeria in the 1960s, when most projects and programmes (free education, University of Ife, Cocoa House) transcended the reign of the region’s leader Obafemi Awolowo because they were ideas of the party - Action Group. Despite the crisis with his successor, S.L Akintola, these projects didn’t stop. Fast-forward to today, where despite a majority of his own party in both Houses, the President has not been able to rally lawmakers towards a common vision. Possibly, it’s time to rethink the entire

budget system, also within states. The budget process cannot remain as dysfunctional as it is at subnational level, where it is mostly a rubber-stamping event. Otherwise, it can also go into more risky territory as being seen within the ranks of the National Assembly. Rather than recognise the federal government’s role as the key pivot for huge projects, the National Assembly is expanding microprojects, overlapping into the terrain of the functions of Local Government Areas and states, enabling its own brand of projectsdone-for-votes, locally known as “stomach infrastructure.” Current research by our Tracka program showed that 65% of the constituency projects is tied to nebulous stomach infrastructure projects that reinforce beggarly attitude from the grassroots. In a recent, brazen example of this trend, Femi Gbajabiamila, the House of Representatives Majority Leader, appropriated a public project and named buses, tricycles and motorcycles after himself, calling it “Gbaja Rides.”

Note: the rest of this article continues in the online edition of Business Day @https://businessdayonline.com/ Send reactions to: comment@businessdayonline.com

Monday 25 June 2018

C002D5556

COMMENT

BUSINESS DAY

comment is free

Send 800word comments to comment@businessdayonline.com

Whither remittances in the Nigerian economy?

GREGORY KRONSTEN Gregory Kronsten Head, Macroeconomic & Fixed Income Research FBNQuest

n the conversation about the diversification of the Nigerian economy, a favourite statistic is the overwhelming share of oil and gas in merchandise exports. The share in 2017 was 92 per cent but falls to 57 per cent when we expand the cake to all currentaccount inflows. Remittances provided 30 per cent of the enlarged total, with the small balance made up of credits on the services and income accounts as well as non-oil exports. Annual remittances are running at about US$22bn, or in naira terms about three-quarters of total spending in the 2018 budget. Put another way, this represents about US$1,200 per head for the diaspora estimated at 18 million Nigerians. This is a stable inflow, unlike portfolio investment or even development assistance. There are seasonal

variations, notably a peak every year for the holiday season in the fourth quarter. The data in the CBN’s balanceof-payments is consistent with the numbers in the World Bank’s latest Migration and Development Brief (no 29), published this April. The annual total has barely moved in recent years although the Bank’s document projects increases in aggregate across sub-Saharan Africa (SSA) of 7.0 per cent this year and 5.6 per cent in2019. Its projections are based broadly upon its global economic outlook, without drilling down into the origins of remittances per country. In Nigeria’s case, the US, the UK and Italy topped the table of sending countries in 2015 according to Western Union, and the top ten were all OECD states. (The exceptions were the UAE and Malaysia.) Conventional wisdom is that the recorded total is substantially understated. Nigerian banks looking to develop this business in the diaspora estimate that the actual annual total could be closer to US$40bn. The cost of remittances is a disincentive. The World Bank’s brief noted that transfers to SSA were the most expensive of all regions. It estimated that 9.4 per cent of a US$200 remittance to the region

Even on the official figures, remittances last year were the equivalent of 6 per cent of GDP. There is therefore the scope for the FGN, and state governments through community associations or even faith groups in the diaspora, to make a developmental impact with innovative policies was deducted in fees in Q1 2018, a small improvement on 9.8 per cent in Q1 2017. In addition to the fees, senders and recipients incur additional costs because they have to take time off work to visit the intermediary. The launch of digital money transfers is starting to lower costs but we should assume that remittances into Nigeria are rather higher than officially stated. The more interesting question is the impact of remittances on the broader economy. This becomes a matter of guess work because the recipient institutions (banks and money transfer agencies) are not required to ask the beneficiaries for any information. The expansion and modernisa-

tion of villages and towns in the state in Kerala in southern India are proof of the journey made by many professionals to employment in the Gulf states. Citizens of the former Yugoslavia would work in car factories in West Germany and invest their savings in small hotels on the Dalmatian coast to generate income on their retirement. The Nigerian diaspora is particularly diverse however, so we cannot point to such obvious examples of development driven by remittances. House-building and support for elderly relatives are two likely beneficiaries. One London-based money transfer agency estimates that 80 per cent of the funds it wires to Nigeria are intended for family support such as school fees, health care and food. The share is probably lower for remittances through banks. Our suspicion is that remittances help to drive the informal economy. Policy documents in Nigeria and other developing countries routinely identify the diaspora as a target to tap for investment. The FGN did raise US$300m from the launch of its maiden diaspora bond, a fiveyear instrument, in June 2017. It could repeat the exercise, having done the initial marketing. India and Israel are probably the leaders in tapping the diaspora for regular budget financing.

Returning to remittances, governments could do rather more. They could take the view that the inflows underpin the economy, albeit in ways that are not obvious, and remain on the sidelines. Alternatively, they could look to channel some of the inflows for their developmental objectives. We hesitate to recommend another fx rate and window in Nigeria, and are thinking more of incentives. The FGN is considering a proposal allowing the diaspora to vote in Nigerian elections. It could combine incentives with its plans to expand the taxpaying economy. Attractive terms for investment in SMEs and special economic zones are two possibilities. Ethiopia has some experience of the second, and Morocco of the first. Even on the official figures, remittances last year were the equivalent of 6 per cent of GDP. There is therefore the scope for the FGN, and state governments through community associations or even faith groups in the diaspora, to make a developmental impact with innovative policies. When we make this call, we are familiar with the way that incentives in Nigeria can sometimes distort the economy and diminish government resources.

sentations which any director may hold”. Interestingly, the Companies and Allied Matters Act Amendment Bill now before the House of Representatives sets a limit of five directorships for Directors on the Boards of Public Companies. According to a recent research by Inoxico - an online credit bureau that specializes in risk management solutions - each director of the 20 largest companies in South Africa sits on 14 other boards. In response to concerns about directors sitting on too many b o a rd s, t h e Ku a l a Lu mpu r Stock Exchange, as part of its listing rules, has limited the number of directorships that any individual can hold to no more than 10 in listed companies and no more than 15 in non-listed companies. It ha s b e e n a rg u e d t hat the size and complexity of a company would determine the level of demand on the time and attention of Directors. Accordingly, concurrent service on the Board of several SMEs should not detract from a Director’s ability to perform effectively on the Board of one or two public companies. Some proponents of multiple directorships have also argued

that spending more time on Board activities is in itself not a panacea for corporate failure. However, given the significant responsibilities and time commitment required to function effectively in that office – including reading through and digesting board packs to ensure meaningful participation at Board and Committee meetings, attendance at Board and Committee meetings, participation at Board Strategy sessions and Director Develo p m e n t p ro g ra m m e s – t h e Board should consider setting a numerical limit of concurrent Board memberships for prospective Board nominees. An effective performance appraisal of the Board and individual Directors is one way of ensuring the right balance. If directors are performing well, the number of boards on which they serve become immaterial. Furthermore, full disclosure of a director’s concurrent Board memberships should be available to shareholders at the time of re-election to allow an informed discussion of both workload and the experience directors can bring to the Board.

Send reactions to: comment@businessdayonline.com

Multiple directorships

BISI ADEYEMI Bisi Adeyemi is the Managing Director of DCSL Corporate Services Limited. For comments and reactions, kindly contact badeyemi@dcsl.com.ng.

t has been argued that serving on multiple Boards afford Directors the benefit of divers e experience that impacts posi t i ve l y o n t h e i r i n d i v i d u a l performance and that of the respective Boards on which they serve. The recourse to insight garnered by a Director from dealing with a particular problem on one Board would certainly come handy when a similar problem surfaces on another Board. Companies with “well-connected” Directors inevitably benefit from more networking opportunities as well as access to strategic insights. However, multiple directorships may become a cause for

concern where the Director finds himself in situations bordering on conflict of interest. The Securities and Exchange Commission (SEC) Code of Corporate Governance provides that Directors should not be members of Boards of companies in the same industry to avoid “conflict of interest, breach of confidentiality and misappropriation of corp orate opp or tunity”. Indeed, the NAICOM Code of Corporate Governance for Insurance Companies provides that in selecting a Director, “limited insider relationships and links with competitors” should be considered. Directors are expected to devote adequate time and resources to their oversight responsibilities. Whilst the SEC Code does not expressly limit the number of concurrent directorships a director may hold, it recognizes that “concurrent ser vice on too many boards may interfere with an individual’s ability to discharge his responsibilities”. The Code enjoins the Board and shareholders to carefully consider other directorships in assessing the suitability or otherwise of nominees for appointment to the Board. The question then is should

numerical limits be set for Directorships? According to a publication in Business Times, a study of U.S. firms (Too busy to mind the business?) did not find any association between multiple directorships and securities fraud litigation. Yet another study of U.S. initial public offerings (Are busy boards detrimental?) concluded that multiple directorships are not only common among newly-listed companies, but also add value to these companies. There is no limit on multiple directorships in the US. However, Malaysia’s Main Market restricts a director to no more than five directorships in listed issuers. The Securities Exchange Board of India recently imposed a limit of seven listed directorships. The UK Corporate Governance Code states that a full time executive director should not take on more than one non-executive directorship or chairmanship in a FTSE 100 company. In Zimbabwe, the Corporate Governance Code prohibits directors from serving on more than six boards, while the Singaporean Corporate Governance Code leaves it to the Boards to “determine the maximum number of listed company board repre-

Send reactions to: comment@businessdayonline.com

BUSINESS DAY

C002D5556

Editorial PUBLISHER/CEO

Frank Aigbogun EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan

Monday 25 June 2018

Spending on petrol subsidy is unconscionable

ecently the fede ra l g o v e r n ment through the minister of state for pet ro l e u m re s o u rc e s , Ib e Kachikwu, reported that its annual expenditure on fuel subsidy has risen to over N1.4 trillion. Going by the figures, it means about N3.76 billion is spent daily on subsidising petrol. For the records, it is also a staggering 386 per cent higher than the earlier figure of N774 million daily given on March 5, 2018 by the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Maikanti Baru, for the importation and distribution of petroleum products in the country. What rational and sensible government could afford to leave millions of its citizens in poor health, ravaged by avoidable diseases such as malaria, yellow and Lassa fever, cholera, typhoid etc while it continues to spend billions of

dollars and trillions of naira yearly to subsidise consumption of petrol by the rich and the middle class? Despite Nigeria being a signatory to the World Health Organisation recommendation for every government to spend at least 13 percent its annual budget to health, Nigeria has not allocated more than 6.57 percent of its budget to the health sector. A good example is the 2018 budget where only N340.45 billion, representing 3.9 percent of the N8.8 trillion expenditure plan, was allocated to the health sector. It took a Bill Gates recently to remind the Nigerian government of global statistics we are all aware of – that “Nigeria is one of the most dangerous places in the world to give birth, with the fourth worst maternal mortality rate in the world, ahead of Sierra Leone, Central African Republic, and Chad,” and that “one in three Nigerian children is chronically malnourished.” W ha t ra t i o na l g o v e r n -

ment with a mo dicum of conscience will spend over a trillion naira yearly on frivolous consumption of petrol that adds ver y little to the economy while allocating only a meagre N605.8 billion to education in a country of nearly 200 million people with a clear majority young population desperately in need of education? What country with a sensible government will be happy allocating far more to its consumption of fuel than educating and developing its future workforce and human capital? We believe there can no longer be any rational or s ensible explanation for the humongous amount of money spent daily on subsidising the consumption of petrol to the detriment of other critical sectors and needs in society. Petrol is a commodity like any other that is best left to market forces of demand and supply. The little political capital derived from maintaining the huge and extremely cor-

rupt fuel subsidy regime is not commensurate with the long-term damage that is being done to the economy, growth and development of the country by that wasteful expenditure. Nigeria cannot afford to be travelling down an escalator that is clearly going up. The government needs to summon up the political courage or will and finally do away with the subsidy regime. The money lost through that scheme can go a long way in transforming the existential realities of many Nigerians. We totally agree with billionaire philanthropist, Bill Gates who surmised that any government that invests in health, education, and opportunities (human capital) is laying the foundation for sustained prosperity of that country. Any country, however, that prioritises other issues, like Nigeria is currently doing with fuel subsidy, will realise, sooner or later, that there will be a sharp limit on how it can grow.

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo

ENQUIRIES NEWS ROOM 08022238495 Lagos 08034009034 08033160837 Abuja

}

ADVERTISING 01-2799110 08116759801 08082496194 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 www.businessdayonline.com The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 LEGAL ADVISERS The Law Union

MISSION STATEMENT To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world.

OUR CORE VALUES

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven. • The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests. • Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessdayonline.com

Monday 25 June 2018

C002D5556

BUSINESS DAY

Monday 25 June 2018

C002D5556

In Association With

On the playing fields, not beaten

Affirmative dissatistaction

Elite private schools are booming in Kenya

A lawsuit reveals how peculiar Harvard’s definition of merit is

And they will change the country

AST year stories appeared in the press, illustrated by pictures of bloody clothing, of an initiation ceremony at Alliance High School outside Nairobi, in which boys were beaten and made to lie on the founders’ graves. The country was shocked, in part because Alliance is regarded as one of the country’s top schools, and the headmaster resigned. The scandal has hastened a shift that is changing Kenyan education. Alliance, which sits in wooded grounds in Kikuyu, a small town north-west of Nairobi, was founded in 1926 by missionaries to educate bright Africans and, by selecting boys from all the country’s regions and tribes, to build a country. After independence in 1963 it became one of Kenya’s “national” schools, similar to Britain’s selective state “grammar” schools. Eight ministers in the post-independence cabinet in 1963 were Alliance old boys. Alumni still proliferate in the top ranks of the professions, government and business. On a hilltop 20 miles to the east are the Nova Pioneer boys’, girls’ and primary schools. They were founded in 2015 by Chris Khaemba, headmaster of Alliance from 19982007. Secondary-school fees are 500,000 shillings a year ($4,945). At Alliance, tuition is free; boarding fees are 54,000 shillings a year. The pupils at both establishments have similarly impeccable manners and many come from similarly prosperous backgrounds. But they reflect the past and future of Kenyan elite education. In the past, rich Kenyans tended to send their children to private primary schools, in the expectation that they would do well enough to get a place in a national school and thus a free, rigorous secondary education. But in recent years, several things have changed. One is the growth of a class of prosperous Kenyans, many of whom take foreign holidays, clog Nairobi’s streets with 4x4 cars and have novel views about education. Kenyan schools tend to feature large classes and rote-learning. At Nova Pioneer, classes are smaller—32 pupils, on average—and more participatory. “Many parents want a wholesome experience that isn’t just drilling,” says Rose Nduati, the

The university’s reputation for fairness and impartiality emerges bruised

BBOTT LAWRENCE LOWELL, the president of Harvard from 1909 until 1933, thought the university had too many Jews. In the first year of Lowell’s presidency, they made up 10% of the student body. By 1922 their numbers had more than doubled. To address what he called “the Hebrew problem”, Lowell proposed an explicit Jewish quota of 15%. When that proved controversial, he set about making “a rule whose motive was less obvious on its face” to deny admission to students suspected of

head teacher of Nova Pioneer Girls. “We’re being taught coding,” says Stacey Wanyoike, a Year 10 student. “I find that really cool. And in the other lessons, you’re not just reading notes, you’re taking part.” Government policy is encouraging the growth of private schools. The state is committed to providing free secondary education for all, and although that has not yet been fully implemented, rising grants from central government have brought fees down. Pupil numbers have therefore been increasing. At Alliance they have doubled in the past decade, to 1,600, and class sizes have increased from an average of 42 to 50-55. “We are a little bit stretched,” says James Kinyanjui Kuria, Alliance’s deputy head. A new curriculum may reduce the rote element in state education, but there are fears that teachers are not prepared, so it may put a further strain on state schools. Duncan Olumbe, an Alliance alumnus, decided that his son Roy should not follow him to his old school. Roy was put off by the stories of bullying; Mr Olumbe and his wife liked the ways of Nova Pioneer and thought that “the transition from a private primary to an overcrowded [state secondary] may be a bit difficult.” He is pleased with his investment, but some customers are trickier. “Most parents are middle-class [by which Kenyans

mean the top 2% or so]. Catering to the needs of a very discerning demographic brings with it a certain element of challenge,” says Charles Tsuma, the head of Nova Pioneer Boys, delicately. Nova Pioneer has plenty of competition: in 2013-17 the number of private primary schools almost doubled and the number of private secondaries rose by half. Some schools are said to be struggling, especially at the top end of the market (1m-2.5m shillings a year) which is beyond the reach of all but the richest Kenyans, and therefore relies to a large extent on expats. Supply is growing to meet demand, thanks in part to international capital. Education has a particular appeal to long-term investors, for children are locked in for up to 12 years. Growth prospects are good because governments are not satisfying the rising demand for good education. And the regulatory environment for private schools in the three big African markets, South Africa, Nigeria and Kenya, is generally favourable. That is not the case everywhere: in India, for instance, which would otherwise be a very attractive market, although private schools are proliferating, for-profit education is banned. Nova Pioneer, which was formed through a merger between Mr Khaemba’s schools and a South African chain, is financed by Fairfax

Africa, a Canadian fund. ADvTECH, a South African chain, bought Makini, a group of nine schools in Kenya and Uganda, earlier this year. In 2015 Brookhouse, a posh Kenyan school, was bought by Inspired, an international chain, which then opened a new campus. The growth of the business has implications for society. The old system had its virtues: although, over time, it was captured by the elite, in its early days it gave poor clever children from far-flung areas a chance, and helped build the idea of a nation. The private schools will encourage social stratification by allowing well-off parents to buy their children educational and thus professional advantage, as happens in Britain and America. Kenya may follow the same path as Brazil and Argentina, where a shift into private education in the 1970s and 1980s led to neglect of the public sector. But the trend will also mean more investment in schools, a better, more questioning, education and an increased flow of Kenyans into universities abroad. And, in its way, the new model of elite education brings together people from different parts of society. Wilson Sossion, for instance, the head of the teachers’ union, who has been campaigning for the closure of the low-cost Bridge International Academies (see article) sends his children to Brookhouse, which charges 1m shillings a year.

being Jewish. Admission to Harvard, previously granted by meeting a clear academic cut-off, became more nebulous—based more heavily on the “character and fitness” of applicants. The new “holistic” admissions policy worked as intended, successfully suppressing Jewish admissions. Harvard, like many of America’s top universities, retains a holistic admissions process. Unlike elite universities in most other countries, American colleges do not simply select the cleverest pupils—they also take into account extracurricular activities, family wealth and race. To critics, this system still operates as an engine of unfairness, except that the victims have now become Asian-Americans, who outperform their white peers on academic measures but still face stiffer odds when applying to Ivy League colleges. Students for Fair Admissions (SFFA), an organisation founded by Edward Blum, a conservative activist opposed to race-based affirmative action, filed a lawsuit against Harvard alleging discrimination against AsianAmerican students in 2014. Despite a furious effort to quash the suit, Harvard was forced to turn over 90,000 Continues on page 15

Monday 25 June 2018

C002D5556

BUSINESS DAY

In Association With

A lawsuit reveals how peculiar...

Don’t crash it

Could a trade war derail global growth?

Continued from page 14

Rising tariffs are the worst of many threats to the world economy

OOK at the headlines, and you would struggle to believe that the global economy is in good health. President Donald Trump continues to fire off volleys in his inchoate trade war, throwing financial markets into turmoil and drawing retaliation. The Federal Reserve is raising interest rates—an activity that usually ends in a recession in America. Tighter credit and a rising dollar are squeezing emerging markets, some of which, such as Argentina, are under severe stress. Yet the world economy is thriving. Growth has slowed slightly since 2017, but still seems to be beating the languid pace set in the five years before that. America may even be speeding up, thanks to Mr Trump’s tax cuts and spending binge. A higher oil price, which in past economic cycles might have been a drag, is today spurring investment in the production of American shale. Some forecasts have growth exceeding 4% in the second quarter of 2018. This sugar rush, however, brings dangers. The first is that it provides temporary political cover for Mr Trump’s recklessness. The second is that, if America accelerates and the rest of the world slows, widening differentials in interest rates would push up the dollar

still more. That would worsen problems in emerging markets and further provoke Mr Trump by making it harder for him to achieve his goal of balanced trade. The trade war is the biggest threat to global growth (see article). On June 15th the White House confirmed that a 25% tariff on up to $50bn of Chinese imports would soon go into effect. Three days later, after China promised to retaliate, the president expanded, by as much as $400bn, the other goods America is threatening to tax. If he follows through, nine-tenths of roughly $500bnworth of goods imported from China each year will face American levies. Meanwhile, the European Union is poised to impose retaliatory tariffs in response to America’s action against EU steel and aluminium. No wonder markets have caught the jitters. The president is unafraid of escalating trade disputes because he believes he has a winning hand. America buys from China almost four times as much as it sells there, limiting China’s ability to match tariffs. The White House hopes this imbalance will lead China to yield to its demands, some of which (cutting the theft of American firms’ intellectual property) are more reasonable than

others (shrinking the bilateral trade deficit). But Mr Trump overestimates his bargaining power. If China runs out of American goods to tax, it could raise existing tariffs higher. Or it could harass American firms operating in China. More important, the president’s mercantilism blinds him to the damage he could inflict on America. He thinks it is better not to trade at all than to run a trade deficit. This folly also dictates his tactics towards Canada, Mexico and the EU. Mr Trump could yet withdraw from the North American Free-Trade Agreement and slap tariffs on cars. The problem is not that America depends on trade. In fact, it is a big enough freetrade area for the eventual damage to GDP, even from a fully fledged trade war, to be limited to a few percentage points (smaller, specialised economies are more dependent on trade and would suffer a lot more). Such selfinflicted harm would impose a pointless cost on the average American household of perhaps thousands of dollars. That would be bad, but it would hardly be fatal. The bigger issue is the vast disruption that would occur in the transition to more autarky. America’s economy is config-

ured for designing iPhones, not assembling their components; the innards of its cars and planes cross national borders many times before the final product is ready. Faced with tariffs, firms have to redirect labour and capital to replace imports. Some analysts attribute Mr Trump’s presidency to the economic shock from trade with China after 2000. The turmoil caused by reversing globalisation would be just as bad. One estimate puts American job losses from a trade war at 550,000. The hit to China would also be severe. Any adjustment would be prolonged by Mr Trump’s unpredictability. Without knowing whether tariffs might rise or fall, what company would think it wise to invest in a new supply chain? It is difficult to imagine such a realignment without a global recession. Tariffs temporarily push up inflation, making it harder for central banks to cushion the blow. The flight to safety accompanying any global downturn would keep the dollar strong, even as America’s fiscal stimulus peters out after 2019. So be wary. The trade war may yet be contained, to the benefit of the world economy. But America is the engine of global growth. In Mr Trump, a dangerous driver is at the wheel.

pages on its tightly guarded admissions process. On June 15th both sides revealed duelling statistical analyses of admissions-decision data in court filings. Harvard’s reputation for fairness and impartiality emerges bruised. By the admission office’s own ratings, Asian-Americans rank higher than white applicants in both their academic prowess and the quality of their extracurricular activities. Yet their admission rates are much lower. For Asian-Americans in the top decile of academic skill, just 13.4% are admitted, compared with 18.5% of whites (see chart). Asians are scored much worse on another measure of applicant quality—the “personal rating”—by admissions officers. Unlike the other two metrics, personality is judged subjectively and is decided by admissions officers who have not met the applicants. The alumni who conduct in-person interviews rate Asian-Americans as highly as white applicants. To SFFA, this constitutes clear proof of discrimination. Peter Arcidiacono, an economist at Duke University employed by the plaintiffs, built a statistical model of the effect of race on admissions. He estimates that a male, non-poor Asian-American applicant with the qualifications to have a 25% chance of admission to Harvard would have a 36% chance if he were white. If he were Hispanic, that would be 77%; if black, it would rise to 95%. Damningly for the defendants, an internal report by Harvard’s research arm, obtained during discovery, reached the same conclusions. Harvard officials claim that the report was incomplete and the analysis oversimplified. Fighting statistics with statistics, Harvard’s lawyers hired David Card, a prominent labour economist at the University of California, Berkeley. His model includes factors like the quality of a candidate’s high school, parents’ occupations and the disputed personal rating. Under these controls, Mr Card claims that Asian-American applicants are not disadvantaged compared with whites. But given that these factors are themselves correlated with race, Mr Card’s argument is statistically rather like saying that once you correct for racial bias, Harvard is not racially biased.

BUSINESS DAY

C002D5556

Monday 25 June 2018 In Association With

Ambassador of aces

Boris Becker, African diplomat The German tennis star is not the first to have claimed diplomatic immunity in court

HEN people say “diplomatic service”, they seldom mean an envoy who can slam an ace over the net at 130 miles per hour. Yet Boris Becker, a German former tennis star who could once do just that, told a London court on June 14th that he should be excused from proceedings because he has diplomatic immunity. After Mr Becker was declared bankrupt last year he faced claims to his assets from a private bank. Instead of coughing up, Mr Becker said that he is, in fact, a representative of the Central African Republic (CAR), a failed state wedged between Congo and Chad. This, Mr Becker said, should end the “farce” of his being pursued by creditors. In fact the farce had only just begun. On June 19th officials in the CAR’s foreign ministry told AFP, a newswire, that the diplomatic passport was a fake, pos-

sibly from a batch of passports stolen in 2014. Mr Becker had claimed to be a sports envoy for the country, working out of its Brussels embassy. The officials said that the job did not exist. That is despite a picture of Mr Becker on the embassy’s website, and a photo (above) of his meeting the CAR’s president, Faustin-Archange Touadéra, in April, when he claimed to have been appointed.

What is the reality? It is hard to say; perhaps Mr Becker really is a diplomat. The CAR is a country with a state budget of around $380m, which is not quite double the annual revenue of the All England Tennis club at Wimbledon, where Mr Becker won his first major title in 1985. It is known for civil war and anarchy and, like Mr Becker, struggles to pay its debts. It is plausible that one arm of the CAR government

does not know what the other is doing. It would not be the first time that a diplomatic passport has found its way into unlikely hands. In 2013 Alma Shalabayeva, the wife of a Kazakh billionaire, Mukhtar Ablyazov, was arrested in Rome with just such a passport, also issued by the CAR. Until his death in 2015, Antonio Deinde Fernandez, a Nigerian billionaire, served as the CAR’s ambassador to the UN for 18 years. Curiously, he had also served as a deputy ambassador to the UN for Mozambique. Others who have apparently been made diplomats by the CAR include an Israeli businessman and an adviser to Libya’s former dictator, Muammar Qaddafi. The countries that have the most difficulty keeping track of all their diplomats are often small and plagued by graft. In December, the tiny Comoros Islands cancelled “at least” 158 diplomatic passports. They had

been used for all sorts of purposes, including breaking sanctions on Iran. In 2011 a Danish filmmaker, Mads Brugger, made a documentary in which he apparently travelled around the CAR on a fraudulently-acquired Liberian passport, bought through a Dutch intermediary. In the documentary he assumed the identity of a dandy diamond merchant by the name of Mads Cortzen. In 2016 Walid Juffali, a wealthy Saudi, claimed immunity from divorce proceedings in Britain on the basis that he was St Lucia’s representative to the UN’s International Maritime Organisation. Philip Hammond, then Britain’s foreign secretary, supported his claim, arguing that overruling it might set a precedent that could later hurt British diplomats overseas. However, a court ruled that Juffali’s diplomatic status was irrelevant to his divorce, and he had to pay his ex-wife a fortune.

The art of the empty

America’s spat with the UN Human Rights Council Which club counts Eritrea, North Korea, Iran and the USA among its members?

F ALL the international arrangements President Donald Trump has forsaken, the UN Human Rights Council deserves the least sympathy. In announcing America’s withdrawal from the Genevabased body, America’s ambassador to the UN, Nikki Haley, called it, “a protector of humanrights abusers and a cesspool of political bias.” Given that it currently includes abusers such as Congo and Venezuela among its 47 members, and is disproportionately fixated on alleged Israeli abuses, that was hard to deny. Yet America’s withdrawal will only make it harder to improve a body that has, despite its flaws, shown recent signs of promise. It also represents another small, but conspicuous, dent in America’s international leadership. The council was formed in 2006, as the successor to the terminally discredited UN Commission on Human Rights, a body now best remembered for having had Muammar Qaddafi, Libya’s then dictator, as its chairman a couple of years before its unlamented demise. The council was designed to be smaller, more orderly and more accountable. Its members are elected to three-year terms by

ously talked of withdrawing from the UN altogether. Quitting the council is far short of that, but it is damaging to American leadership nonetheless. Indeed, that is especially true given the timing. Withdrawing from the world’s main human-rights forum even as its president was grappling with his policy of dividing migrant children from their families is not a good look for the shining city upon a hill.

the UN General Assembly, which can also vote, by a two-thirds majority, to remove any deemed to have committed “gross and systematic violations of human rights”. Not many have been. Yet the assembly performs valuable work. It carries out regular humanrights audits, known as “universal periodic reviews”, on each UN member state. It has also sent investigators to the scene of many alleged atrocities, including recently in Burundi, Eritrea, Myanmar, North Korea and

Syria. Last month the council voted to send another mission to Gaza, to investigate the killing of Palestinian protesters by Israeli troops. That was justified, notwithstanding the body’s antiIsrael bias, which is symbolised by a standing agenda item on the Palestinian Territories that must be raised at every council meeting. Moreover, under America’s influence, the anti-Israel animus has been growing less evident. Between 2006 and 2009, when America last boycotted

the council, at the instigation of George W. Bush, six of its 12 “special sessions” were devoted to Israel. After America rejoined, under Barack Obama, only one of the 14 or so sessions was on Israel. The lesson is clear. If America truly wanted to stand with Israel and improve the UN body, it would not now join Eritrea, Iran and North Korea in refusing to take part in it. That suggests its decision is motivated more by Mr Trump’s general aversion to international bodies. After all, he has previ-

BUSINESS DAY

Monday 25 June 2018

CityFile

LASG launches LagosReads JOHN SALAU

agos government has the LagosReads initiative as part of the strategies to revive the dying culture of reading among residents in both public and private libraries across the state. Obafela Bank-Olemoh, special adviser to the state governor on education at the launch on Friday, said the initiative would encourage youths to embrace reading as a way of life. According to Bank-Olemoh, LagosReads is what the state need at this point in time where students are distracted from reading. “It is something the governor is very passionate about and has provided funds to ensure the programme is sustained. “LagosReads is aimed at improving the reading culture of Lagosians by enabling, facilitating and promoting reading programmes with the view of rewarding readers through LagosReads quiz competitions,” said Bank-Olemoh. Asimiyu Oyedipe, director, Lagos State Library Board said the LagosReads initiative is the foundation for a good and healthy reading culture. “It is believed that when you read, you know and when you know, you try to exhibit what you have learnt which is called active knowledge,” he said.

Oyo to dredge 64 rivers

yo State government has concluded arrangements to dredge 64 streams and blocked drainage across the state as as part of efforts to prevent flooding. Commissioner for environment and water resources, Isaac Ishola confirmed the government’s decision in a statement. The dredging is expected to be undertaken by the environment ministry in conjunction with the Ibadan Urban Flood Management Project (IUFMP). Ishola stated that the Project Implementation Unit (PIU) safeguard team would be displaying Environmental and Social Management Plan (ESMP) for dredging of streams and clearing of blocked drains. “The effort to be undertaken in line with the safeguard requirement of IUFMP sub projects is to sensitise the general public on the social and environmental impact of the project,” he said. He noted that the ESMP action would mitigate the negative impact of the project as stipulated by the guidelines of World Bank Projects.

Generator, major cause of hearing loss- expert

n expert on hearing loss, Bolajoko Olusanya has identified generators, some prescription drugs, and exposure to loud noise as major causes of hearing loss in the country. Olusanya, a medical director at Phonics Hearing Centre, made the observation, Friday, in Lagos. “In Nigeria, we use generators a lot, because of frequent power outages. “The public should be sensitised to recognise that apart from getting power supply from generators, staying too long near them can cause hearing loss and once you have hearing loss, it is for life. “Also, people who are exposed to loud noise, including pepper grinding machines, those in the aviation industry, as well as factory workers, are at risk of hearing loss. “People should be made aware that if you are working where there is noise, do not stay for too long and if you have to stay, use ear plugs to protect your hearing. “Another risk factor apart from generators is the frequent use of drugs, like some antibiotics are susceptible to hearing loss,’’ he said.

Iyana Oba, roadside Market in the wake of the ongoing reconstruction of the Lagos-Badagry Expressway.

Pic by Pius Okeosisi

Enugu: Residents still desert homes after herdsmen attacks …as victims relive experience to fact-finding panel

esidents of Nimbo community in Agwu local government area of Enugu State have reportedly deserted their homes following incessant attacks by suspected herdsmen. The community with more than 300 households is now overgrown with weeds and shrubs. Onyemelu Okeke, a community leader told members of the commission of enquiry set up by the Enugu State government during a recent facts-finding mission to Nimbo that the village had been in ruins for about two years now. Okeke, who is the traditional prime minister of Obinagu Obofia Ugwuleshi, alleged that the community which is on the border of Enugu and Abia States, on the Enugu/Port Harcourt expressway was constantly attacked by suspected herdsmen. According to him, their women be-

came victims of rape, residents killed and their farmlands destroyed by cattle, forcing many to relocate hinterland for the safety. Okeke appealed to the government to eject the herdsmen who had taken possession of the deserted community to enable the people return to their homes. He said that the people were predominantly peasant farmers and currently faced with difficulties in their adopted communities. Okeke noted that their market, which was the only public infrastructure in the community, had collapsed as there was no one to maintain it. Patricia Chukwu, a member of the community narrated to the panel how her husband was murdered in cold blood by suspected herdsmen. Chukwu, who gave her husband’s name as Patrick Chukwu, said that he

was killed at midnight on the ill-fated day. She said that the incident made her household to abandon their home and relocated to a nearby community where they lived as tenants. “We w ere all sle eping when the herdsmen invaded our home. They told my husband to bring all the money he had, but he told them that there was no money. They killed him with their machete. My children and I witnessed the murder of my husband and the trauma of the incident and the fear that they would come again made us to vacate our home,” she said. Chukwu said that life had not remained the same as it had been difficult to take care of the family. Most of the buildings in the community have either fallen or have cracked walls and hanging ceilings with cow dung littered all over the land.

Edo communities threaten action against ERA/ FoEN IDRIS UMAR MOMOH, Benin

gitations by environmental rights groups Environmental Rights Action /Friends of the Earth (ERA/ FoEN) against the management of Okomu Oil Palm Plc have taken a new dimension, as host communities have threatened legal action against the agitators. It would be recalled that ERA/FOEN and some persons from the host communities recently accused the oil palm company of land grabbing, parading fake Roundtable on Sustainable Palm Oil (RSPO) certification, intimidation and harassment of the communities with security operatives. But speaking with journalists in Benin, Edo State, representatives of the host communities described the allegations as false and deliberate attempt to smear the corporate and good image of the company. Robinson Oroupa, Community Liaison Officer (CLO), Okomu extension II, gave the

environmental rights groups seven days to retract the allegations made against the oil palm company According to him, we the undersigned neighboring host communities of all Okomu Oil Palm Company Plc plantations at the behest of the respective heads of our communities and having been duly mandated by our respective chiefs, Odionwere and elders to speak on behalf of our communities now respond to the unfounded allegations directed against Okomu Oil Palm by one Godwin Uyi-Ojo, the executive director of Environmental Rights Action / Friends of the Earth (ERA/FOEN) and some individuals purporting to be representing our communities. “We, the undersigned neighboring /host communities of Okomu oil palm company Plc, located in three local government areas of Edo State, namely Ovia South-West, Ovia North-East, Uhunmwode have for the second time, risen against ERA/FoEN, an NGO who

claims to be the mouth piece of our respective communities, and who has propagated misinformation in this regard by misrepresenting our community’s names in its myopic and lonesome campaign to try to drum up socalled support against the Okomu oil palm company without any prior permission from our traditional leaders and seemingly solely to satisfy its own selfish ends”, he said. The communities, however, demanded a publish retractions and apology from the rights groups in the media, saying failing to do so the communities may have no other recourse but to file a law suit against ERA/ FoEN and its executive director for defamation and libel. They also want the group and any of its officers to refrain from using any of the undersigned Edo community’s names or spokespersons for any reason whatsoever, either directly or indirectly, without the prior written consent of the respective head of the communities.

BUSINESS DAY

Monday 25 June 2018

Live @ The Stock Exchange Top Gainers/Losers as at Thursday 24 June 2018 GAINERS Company OKOMUOIL CCNN GUARANTY ZENITHBANK NEM

Market Statistics as at Thursday 24 June 2018

LOSERS Opening

Closing

Change

N90.2

N94.2

Company

Opening

Closing

Change

N230.3

N225

-5.3

N24

N24.75

0.75

UNILEVER

N53

N50.75

-2.25

N40.05

N40.7

0.65

N35.8

N34.05

-1.75

N25.7

N25.9

0.2

N2.9

N3.04

0.14

N112

N110.5

-1.5

N40

N39

-1

DANGCEM

WAPCO

ASI (Points)

37,862.53

DEALS (Numbers)

3,847.00

VOLUME (Numbers)

167,232,889.00

VALUE (N billion)

1.428

MARKET CAP (N Trn

13.715

Diamond, Julius Berger, Forte, Dangote Flour, Transcorp may exit NSE 30 index Stories by Iheanyi Nwachukwu

he Nigerian Stock Exchange (NSE) has disclosed the expected review of the NSE 30, and the six sectoral indices of the Exchange, which are NSE Consumer Goods, NSE Banking, NSE Insurance, NSE Industrial, NSE Oil & Gas and NSE Lotus Islamic Indices. The composition of these indices after the review will be effective on July 1, 2018. With the review, the market will witness the entry/reentry as well as exit of some major companies. For NSE 30 index, Diamond Bank Plc, Julius Berger Nigeria Plc, Forte Oil Plc, Dangote Flour Mills Plc, and Transcorp Plc will likely exit, according to information released by the NSE on Friday June 22, 2018. They are likely to be replaced by FCMB Group Plc, Oando Plc, Beta Glass Company Plc, UAC of Nigeria Plc, and Sterling Bank Plc. The NSE 30 tracks the top 30 listed companies

Bayo Adeokun, Managing Director/Chief Executive Officer, Electronic Payplus Limited (L) receives PCI DSS Certification for payment card industry data security standard from Adetokunbo Omotosho, Managing Consultant, Infoprive at an event held in Lagos office of Electronic Payplus.

in terms of market capitalisation and liquidity. For the NSE Consumer Goods Index, Northern Nigeria Flour Mills Plc and Vitafoam Nigeria Plc will likely exit while Union Dicon Salt

Plc and DN Tyre & Rubber Plc will likely replace them. NSE Banking Index will likely see new entrants like Skye Bank Plc and Jaiz Bank Plc; while Wema Bank Plc and Diamond Bank Plc will likely exit.

Coronation Merchant Bank inaugural Commercial Paper issuance records over 180% subscription

oronation Merchant Bank Limited, a leading investment bank in Nigeria, has recorded a very strong performance in its inaugural Commercial Paper issuance. The Bank set out to raise the sum of N15billion on the first tranche under its N100 billion Commercial Paper Programme. It received commitments of over N28 billion from both Institutional and High Net Worth Investors. This represents over 180percent subscription level. The issuance comprised of two series of 180 and 270days. The 180-day paper was issued at a discount rate of 12.60percent and a yield of 13.43percent while the 270-day paper was issued at 12.69% discount rate and a yield of 14percent. According to industry experts, this is an unprecedented achievement

in Nigeria’s Capital market especially given the tight pricing on the instruments. Commenting on the result, Abu Jimoh, Group Managing Director/CEO of Coronation Merchant Bank Limited said that, “we are pleased at the outcome of this exercise. The Commercial Paper issuance, which represents our very first in the market, has enabled us to achieve our objective of effective balance sheet management that is geared towards providing capital to various sectors of the economy. The positive result recorded by our commercial paper is a testament to the strength of the Bank’s credit in the capital markets. It is both gratifying and humbling to note this level of investor confidence in the Bank”. Abiodun Sanusi, Group Head of Investment Bank-

ing at Coronation Merchant Bank stated that, “we started our investment banking business in 2016 and in less than three years, we have contributed immensely to the development of the capital market - both on the equity side and the debt capital side. He further stated that, “Today, we have differentiated ourselves as a formidable player in the capital market having raised in excess of N300 billion for various companies in multiple sectors of the economy. The success of this issuance further demonstrates the market’s confidence in the Coronation Merchant Bank Story. Coronation Merchant Bank group was established to fill the gap in a long-underserved market segment, seeking to address the need for long term capital across key sectors of the economy.

The NSE Insurance Index will likely see new entrants like Consolidated Hallmark Insurance Plc, Sovereign Trust Insurance Plc, Veritas Kapital Assurance Plc, and Regency Al-

liance Insurance Plc while Cornerstone Insurance Plc, STACO Insurance Plc, Standard Alliance Insurance Plc, and Equity Assurance Plc will likely exit. NSE Industrial Index will likely welcome Greif Nigeria Plc and Austin Laz & Company Plc; while Portland Paints & Products Nigeria Plc and DN Meyer Plc will likely exit. NSE Oil & Gas Index will likely have new entrants like Japaul Oil & Maritime Services Plc and Eterna Plc, while Conoil Plc and MRS Oil Nigeria Plc will likely exit. NSE Lotus Islamic Index will likely see new entrants like Nigerian Aviation Handling Company Plc, Jaiz Bank Plc, and Seplat Petroleum Development Company Plc, while Lafarge Africa Plc, GlaxosmithKline Nigeria Plc, and Total Nigeria Plc will likely exit. The Nigerian bourse began publishing the NSE 30 Index in February 2009 with index values available from January 1, 2007. On July 1, 2008, the NSE developed four sectoral indices with a base value of 1,000 points, designed to provide invest-

able benchmarks to capture the performance of specific sectors. The sectoral indices comprise the top fifteen most capitalized and liquid companies in the Insurance and Consumer Goods sectors, top ten most capitalized and liquid companies in the Banking and Industrial Goods sector and the top seven most capitalized and liquid companies in the Oil & Gas sector. In July 2012, the Nigerian bourse launched The NSE Lotus Islamic index (NSE LII) which consists of companies whose business practices are in conformity with Shari’ah investment principles, with the aim of increasing the breadth of the market and creating an important benchmark for investments as the alternative ethical and noninterest investment space widened. The companies that appear on the Islamic Index have been thoroughly screened by Lotus Capital Halal Investment, in accordance with a methodology approved by an internationally recognized Shari’ah Advisory Board comprising of renowned Islamic scholars.

Total Nigeria pays N4.75bn final dividend

otal Nigeria plc has paid total dividend which amounts to N4.75billion for the year ended December 31, 2017, following the approval of its shareholders at the company’s 40th annual general meeting (AGM) held in Lagos. The final dividend represents N14 per share. The company had earlier distributed the sum of N1.02billion as interim dividends, which represents N3 per share. The teeming shareholders who lauded the board of directors for their year-on-year commitment to improving returns to shareholders also received and approved the company’s financial statements for the year ended December 31, 2017. The shareholders also received and approved the reports of the directors, auditors, and

audit committee thereon. In 2017, Total Nigeria Plc recorded turnover of N288billion compared to N291billion in 2016 and it delivered a profit after tax (PAT) of N8billion, representing the second highest result ever in the history of Total Nigeria Plc. The company achieved this results in spite of economic recession in the country and its consequent contraction of the downstream market; scarcity of PMS due to high landing cost compared to the official template; FX scarcity hindering the importation of automobile gasoline oil (AGO) and aviation turbine kerosene (ATK); and high financial costs due to increase in bank lending rates and reduction of Total Nigeria Plc credit terms for PMS purchases. “With a stable and conducive business environ-

ment, we envisage that 2018 will provide Total Nigeria with opportunities for growth, investment and consolidation. We intend to take advantage of the projected growth the Nigerian economy will offer and deliver value to you our shareholders and other stakeholders,” said Stanislas Mittelman, chairman, Total Nigeria Plc. “At this point I would like to reiterate that Total Nigeria Plc continues to blaze the trail as the clear market leader in the downstream sector of the Nigerian oil and gas industry with an extensive distribution network of service stations nationwide. For sixty-one years and counting, we continue to provide top tier products and services to diverse clientele with an unflinching commitment to ethical standards”, Mittelman added.

Monday 25 June 2018

BUSINESS

COMPANIES & MARKETS

Pg. 20

IFC earmarks $1bn for Indorama agricultural diversification project

he International Finance Corporation (IFC), a member of the World Bank Group, has announced a new $1 billion debt financing for Indorama Eleme Fertilizer & Chemicals Limited, Nigeria (a subsidiary of Indorama Corporation) for the construction of a new fertilizer line to support Nigeria’s agriculture and diversification. IFC made this announcement in Lagos, stressing that the line will expand its capacity of urea fertilizer to more than 2.8 million tons. It broke down the finance saying it will directly lend $100 million and mobilize an additional $850 million of loans from other developmental financial institutions and commercial banks. Another $50 million in financing will be available from IFC’s Managed CoLending Portfolio Programme the statement said.

R AG G Investment Management Limited in collaboration with Development Finance Institutions is offering a round of support for financial institutions, and companies in the Impact and Climate Finance domain in the West African region, to raise new capital as debt and equity investments, and support business growth. FRAGG Investment Management Limited is an impact investment management and advisory company that specialises in the management of funds targeting investments in the impact and climate domains. Consequently, the firm is making available a minimum of N175 million for investment in companies and projects in the impact sectors such as- Financial Institutions (MFIs, SME Banks, Finance Houses, OFIs, and Commercial Banks) Agriculture, Healthcare, Affordable Housing, and Climate Finance - that are looking to expand and scale-up. Such companies and projects invited to apply for a round of support and funding from a wide range of offshore investors (Development Finance Institutions, Specialised Investment Funds, Impact Funds, and other partner investors). “Using a triple-bottom line approach, our main target is investing in and mobilising funds

Joining IFC as Joint Mandated Lead Arrangers (including as lenders) are European Investment Bank, YES BANK, CDC Group PLC, African Development Bank, Bank of Baroda and Standard Bank. Also supporting the financing are Standard Chartered Bank; Bangkok Bank; FMO; DEG; PIDG company, the Emerging Africa Infrastructure Fund; PROPARCO; ICICI Bank Limited; and Citibank. The large number of participating banks signals a strong endorsement of the project, Indorama, and the country by the syndicated loan market lending though a blend of IFC A and B Loans and uncovered facilities. “Nigeria has enormous potential to achieve agricultural self-sufficiency and food security which is evident from the multi-fold increase in domestic fertilizer consumption after the start of Indorama’s first plant. Nigeria has also become a major hub for urea exports. With Line 2, we aim to further expand our ability to provide competitively priced and high-quality fertilizer to farmers in West Africa and across the globe. Indorama is

looking forward to continue contributing to Nigeria’s economic development”, Manish Mundra, CEO, Indorama Africa said. Sérgio Pimenta, IFC Vice President for Middle East and Africa said, “IFC aims to support Nigeria’s efforts to strengthen its manufacturing base and improve stability of its financial system through greater foreign exchange earnings from exports. With Indorama Eleme, IFC is also a partner in helping farmers in West Africa increase their food production and incomes.” Amit Lohia, Group Vice Chairman, Indorama Corporation said, “This financing reflects our strong partnership with IFC over a span of almost three decades. We are extremely pleased to bring our financial partners to Nigeria on the back of this strong partnership.” Significant amounts of natural gas are wasted in Nigeria due to gas flaring. According to the World Bank, over the past three years Nigeria has flared an average of 750 million cubic feet per day of associated gas. Utilization

of gas for downstream chemical industries such as fertilizer helps reduce gas flaring, a contributor to greenhouse gas emissions associated with climate change. IFC a sister organization of the World Bank and member of the World Bank Groupis the largest global development institution focused on the private sector in emerging markets. It works with more than 2,000 businesses worldwide, using its capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In FY17, IFC delivered a record $19.3 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. Indorama Corporation is one of Asia’s leading chemical holding companies with subsidiaries and affiliates in Asia, Africa, CIS and the Middle East manufacturing Polyethylene, Polypropylene, Polyesters, Fertilisers, Textiles and Synthetic Disposable Gloves.

FRAGG Investment Management offers debt, equity funds for businesses HOPE MOSES-ASHIKE for high-growth companies in Nigeria and West Africa that promote social and environmental impact. Our goal is to make a strong financial return for investors while supporting companies that are contributing to a better world”, Franklin Odoemenam, managing director said. The timeframe for the application and selection process of interested participants is between July 6, 2018 and August 7th, 2018. The fund targets the following impact sectors: Inclusive finance & related fintech services: Including Microfinance/ SMEs Banks, Finance Houses, OFIs, Commercial Banks, and Financial Technology Solutions. Agriculture: Agribusinesses covering the entire agriculture value chain, including but not limited to food production especially small-holder farming, food processing and storage, packaging, distribution (transportation and haulage), and wholesale/retail market (export or domestic). Indirect investments into financial institutions with viable

agriculture portfolio to finance operations that meets with the investment criteria. Healthcare & related services: From diagnosis to treatment and core areas of health management and prevention, including but not limited to general and specialised hospitals, primary health care centres, pharmaceuticals, HMOs, and health technology. Affordable housing: Housing projects that increase access to practical and viable housing especially for earners on the lower end of the spectrum. Sustainable and energy efficiency housing projects are of particular interest. Climate finance: Projects covering climate Mitigation, Adaptation and REDD+ (reducing emissions from deforestation and forest degradation). Projects including but not limited to Renewable Energy, Lower Carbon & Efficient Energy Generation, Waste Management & Recycling, Non-Energy GHG Reductions, Sustainable Transportation, Water & Waste Water Systems, and Coastal & Riverine Infrastructure. Education: Inclusive education models with projects cover-

Heritage Bank rewards performance

C o m pa n y n e w s a n a ly s i s a n d i n s i g h t

Innocent Odoh

DAY

ing low-fee private education in preparatory, primary, secondary, tertiary, and vocational institutions, education technology (EdTech), educational infrastructure and related services.

Entrepreneurs in Ausso Leadership Academy charged to adopt positive mindset

he Minister of Industry, Trade and Investment, Okechukwu Enelamah has charged entrepreneurs to adopt a counter-cultural mindset in order to become successful business gladiators. He made this known in an interactive session with the delegates of the 2nd Ausso Leadership Academy (ALA) Masterclass at the Entrepreneurs’ hub in Lagos. According to Enelamah, the counter-cultural mindset is a call to excellence despite any seeming culture of mediocrity within the Nigerian business clime. He encouraged the delegates to adopt an Olympic mindset and prepare to play on the global stage as well as cultivate a deep understanding of their local space. Speaking at the event, Austin Okere, founder and entrepreneur-in-residence at the Ausso Leadership Academy, thanked Enelamah for honouring the call to mentor the entrepreneurs and business leaders at the Academy. He noted that the session has been instrumental in providing insightful details about the activities of the government. “ we are pleased that you

have honoured the invitation to share your experience to motivate the delegates to aspire to greater heights. Today, you have reinforced the recurring mantra from other champions at ALA that you can be excellent and successful”, he said. The minister also commended the Founder for providing a world class facility as a veritable medium to mentor entrepreneurs to optimize job creation and enable shared prosperity. Speaking on behalf of the delegates, the Class President, Amina DejiLogun-Leko thanked the minister for coming to share his experience with the class. She encouraged the Federal Government to prioritize such interactive engagements in order to regularly update stakeholders of government’s efforts and the role that the business community can play in the process. The ALA Masterclass is a bespoke programme designed to impact entrepreneurs and business professionals via a learning experience in a very conducive physical ambience, coupled with teachings delivered by a faculty with proven experience and an enviable track record in business and entrepreneurship.

BUSINESS DAY

C002D5556

Monday 25 June 2018

COMPANIES & MARKETS Heritage Bank rewards performance

Access Bank GMD defends sector support for development projects

…promotes over 350 staff

...as 5% of profit goes to agriculture, SMEs

eritage Bank has promoted 350 of its staff in line with her commitment to reward hard work and innovation within its workforce. The move is expected to strengthen the bank’s business across all markets where it operates. The promotion which has been well received by staff of the bank was outcome of an appraisal system that identified high performers in the bank. The MD/CEO, Ifie Sekibo, who commended the staff for their efforts, charged them to tenaciously hold to the bank’s core values in their endless quest of delivering excellent services to both internal and external customers of the bank. “I commend your well-de-

served promotion. I also wish to especially thank those colleagues who have not made it on this year’s list. I urge you to keep up the good work and contribution, as the organisation recognised your efforts. We promise to continue to reward and recognise your contributions in due time and to use all opportunities to demonstrate this,” MD said. Sekibo, however, said the announcement, is especially heartening in the face of the rough times occasioned by the downward trend in the economy. But said the move is part of the bank’s strategic plan to keep a vibrant workforce that will enable it achieve its vision of being the Nigerian most innovative bank of choice in service delivery, superior returns to its various stakeholders and as well contribute to the growth

of the nation’s economy. With its legacy of innovation, Heritage Bank remains the pioneer bank in Nigeria to use computers for banking services, and had pioneered its flagship “Cash Point 24/7 ATM services in Nigeria in 1990. Heritage was also first to issue a transparent Mastercard debit card in SubSaharan Africa and pioneered the mPOS in response to the CBN Cash-less initiative. Heritage Bank underscored its status as one of the leaders in innovation in the banking sector with the introduction of an advanced intelligent digital experience known as Octopus. This intelligent digital power experience is targeted at improving the over 20 million small business and to meet the demands of an ever-growing active population of Nigeria

L-R Andrew Otike- Odibi , MD/CEO, C&I Leasing plc; Kim Fraser, technical director, Galooli; Frances Ogujawa, head, Citracks Telematics Solutions, and Nissim Moshe , MD, Galooli, at the Telematics conference in Nigeria hosted by Citracks (a business unit of C&I Leasing plc ) and Galooli in Lagos. Pic by Pius Okeosisi

with simple to use tweaks in making banking experience much more flexible and fun. Meanwhile, the Bank has deliberately focused on the tourism and SME segment in a bid to create a fresh set of vibrant entrepreneurs that will create jobs and distribute wealth in the Nigerian economy because of recent statistics which indicate high unemployment among the youths that make up a large percentage of the population. One of its initiatives within the MSME sector is its partnership with the Central Bank of Nigeria (CBN) and the National Youth Service Corps (NYSC), under the N3billion CBN Youth Innovative Entrepreneurship Development Programme (YIEDP), which is targeted at youth, particularly current National Youth Corps members and Corp member post five years of service. The bank has also launched a N500 million Young Entrepreneurs and Students (YES) Grant in Lagos. The initiative, which is in partnership with the Nigerian Youth Professional Forum (NYPF), will, according to the bank, support students and young entrepreneurs toward socio-economic freedom. Also, in furtherance of its commitment to creating jobs and wealth, Heritage Bank in partnership with the Center for Value Leadership (CVL) developed various impact-driven programmes to empower the youths and women particularly in the under-developed communities in Lagos State and one of these is the Young Entrepreneurship Business Training Programme (YEBTP).

Okomu Oil announce plans to pursue RSPO Certification IDRIS UMAR MOMOH

s part of policy to maintain its hold in the agro-allied industry in the agricultural sector, the management of Okomu Oil Palm Plc, said it has concluded plans to be the first Roundtable on Sustainable Palm Oil (RSPO) certified company in the country. Graham Heifer, managing director of the company who gave the hint during the company’s 2018 , Health, Safety and Environment Awareness Week, with the theme, “Behavioural Safety in Work Places”, said between N60 million and N80 million has been earmarked for the certification, Environmental Impact Assessment (EIA) and

Health, Safety and Environment (HSE). Recalled that on June 5, 2018, Environmental Rights Action/Friends of the Earth (ERA/FOEN) and some members of host communities of the company had faulted the organization’s Roundtable on Sustainable Palm Oil (RSPO) certification claimed by the company. The communities are located in Ovia South-West, Ovia North-East, Uhunmwode and Owan West local government areas. In his remark, Heifer, who said the HSE Programme has assumed an annual event, disclosed that necessary machineries have been put in place to ensure that it becomes the first RSPO certified company in the country.

He said the HSE, was part of the company’s plans towards RSPO and other certification before the end of the year. “This year alone, the company has budgeted between N60 million and N80 million on Roundtable on Sustainable Palm Oil (RSPO) certification processes, and Environmental Impact Assessment (EIA)”, he said. The managing director of the multi-national oil palm industry, also disclosed that the firm has been locally and international certified by the relevant regulatory agencies such as National Administration for Food, Drug and Control (NAFDAC ), Standard Organization of Nigeria (SON) various International Standard Organiza-

tion among others. He explained that the certifications especially the RSPO, would be an added advantage for the company to maintain its lead in the agro-allied sub sector in the agricultural sector. He however described as mischievous and calculated attempt by the Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN) to smear the corporate image of the firm in a recent press conference. Heifer, who denied having RSPO certification on the company’s banners , however urged members of the environmental crusader to be humanly enough to approach and engaged the authorities of the company on its operational modus-operandi.

HOPE MOSES-ASHIKE

he Group Managing Director of Acces Bank Plc has said that Nigerian banks are keen to support developmental projects in Nigeria, stating that Agriculture, Small and Medium Enterprises Investments are meant to benefit from the sectors development funding. The Agriculture and Small and Medium Enterprises Investments (AGSMEIS), a funding scheme in the sector was established in 2016 by the Central Bank of Nigeria (CBN) and the Bankers Committee to improve access to affordable financing for MSMEs, particularly those operating in the informal sector of the economy and to support the Federal Government’s efforts and policy measures to promote sustainable economic development and employment generation. Speaking at the 7th German Nigeria Business Forum in Lagos, Wigwe explained that banks sterilised five percent of their Profit after Tax (PAT) annually to finance eligible projects under the Scheme. “The reason for that AGSMEIS fund is to help to support developmental projects. Upon all the money which we have raised so far, which was N26 billion as of last year, not up to N2 or N3 or N4 billion has been spent”, he said. On the issue of high interest rates, he said if some structural

problems in the country are addressed, some structural problems in the country are addressed; the amount of interest rates being charged by banks would reduce. Some of the structural problems are infrastructure, power, and communication problem, among others. “We also need to look at the issue of infrastructure. Resolving power alone can bring down our cost of production by as much as 40 per cent. So, once some of those variables are resolved in the economy, interest rate will come down”. He emphasised the need for Nigerians to look inwards and consume what is produced in the country, saying that there is no need to continue to import everything because “when you do that, you have imported inflation”. “So, if we basically consume what is produced in Nigeria, what you see is that all of these variables would start coming down,” he added. Wigwe explained the reason for setting up German desk in Access Bank. “What the German desk sets to do is to put Nigerian businessmen who seek to do business in Germany or buy German products, in touch with their German counterparts. “Secondly, it puts German businessmen in touch with the appropriate Nigerian businessmen who intend to do business in Germany.

Campari inspires consumers with ‘Make It Red’ Campaign

orld-renowned premium cocktail base drink, Campari, is set to inspire Nigerian consumers to discover and share their unique passion with one another. Campari already known for its vibrant red colour have tasked consumers to rekindle their passion by taking the ordinary and make it extraordinary through its refreshing campaign titled ‘Make It Red’. The Campari ‘Make It Red’ campaign will afford teeming consumers and adorers of the invigorating bitter tasting cocktail base to experience the versatility of Campari’s secret recipe whilst sharing unique and exhilarating moments with loved ones. However, to further sustain the style, resonance and excitement which personifies the brand, Campari has also extended the contract of iconic entertainer and multi-awardwinning music act popularly known as 2Baba as the lead brand ambassador.

Also, as a part of the Campari ‘Make It Red’ experience, winners from the Display and Win promotion, will join Campari brand ambassador and music icon 2Baba on an all-expensespaid trip to the 2018 Russia World Cup in support of the Nigeria Super Eagles. The Brand Ambassador for Campari, Innocent Idibia popularly referred to as 2Baba in his reaction stated that “I am highly enthusiastic about the Campari ‘Make It Red’ campaign as it affords me and other interesting personalities like Lasisi Elenu, Tobi Bakre, Linda Osifo, TeddyA, Harrysong and Bambam to share a fantastic brand experience with our teeming fans. My journey with the Campari brand has been a great one with numerous opportunities.” Campari is the world No.1 Spirit Aperitif with a 150-year secret recipe that gives a distinct and captivating drink. Campari encourages everyone to enjoy their drinks responsibly, Toasting life together.

Monday 25 June 2018

C002D5556

BUSINESS DAY

Business Event

Okechukwu Enelamah, minister of industry, trade and investment (l), and Austin Okere, founder and entrepreneurin-residence, the Ausso Leadership Academy, during the minister’s interactive session with the delegates of the 2nd Ausso Leadership Academy (ALA) Masterclass at the Entrepreneurs’ hub in Lagos.

L-R: Adekune Taiwo,Pastor The Redeemed Christian Church of God Victory Chapel Magodo, Olukayode Pitan, Managing Director, Bank of Industry/Special Guest, and Daniel Adebola, President, LP 21 Redeemers Men’s Fellowship, at the 2018 Men’s Convention in RCCG Victory Chapel, Magodo,Lagos...on Sunday

L-r: Tope Smart ,group managing director/CEO, NEM Insurance Plc; Fidelis Ayebae, chairman board, and Olajumoke Philip-Akede, company secretary, during the 48th Annual General Meeting of NEM Insurance Plc held in, Ibadan, Oyo State recently.

L-R: Esomchi Nwofor, chief technology officer, Custodian Investment Plc; Olubunmi Aderemi, CEO, Custodian Social Responsibility Foundation; Ngozi Nlebemuo, executive director, operations, Custodian Life Assurance Limited; Bisola Ajibola, head of strategy, Custodian and Allied Insurance Limited, and Oladele Akinsanya, head, retail division, Custodian and Allied Insurance Limited, during the launch of Max, Nigerian’s first digital advisor for the non-banking financial sector in Lagos. Pic by Olawale Amoo

BUSINESS DAY

Monday 25 June 2018

INTERVIEW

Monday 25 June 2018

C002D5556

BUSINESS DAY

My ambition is to stamp out poverty, industrialise Cross River – Ayade BENEDICT AYADE, a lawyer, professor and a former university don, is the governor of Cross River State. In this interview with ZEBULON AGOMUO and MIKE ABANG held inside the Rice City, Calabar, he spoke on why his administration is passionate about agriculture, industrialisation and the priority given to payment of salaries in the state. He also explained that emphasis on job creation and his decision to expand government was to ensure that Cross River does not contend with social vices associated with youth unemployment. He also spoke on other issues. Excerpts: We’ve been following what you have been doing in the area of agriculture and we wonder where you drew the inspiration; as a politician, not many colleagues of yours would want to go into something that does not yield immediate returns; what’s your motivation? he President was very clear when he came in that the roadmap as alternative to the oil is agriculture. So, if the president of the country could make that choice; it is our own responsibility as governors to drive it into reality and that’s why I focus on agriculture to ensure that the statement made by the president is put into action. It’s a very crystalclay footprint.

What is this about the Rice City we hear about here? Well, Nigeria spends over N400 billion importing rice every year and additional N60 billion in months of Christmas. So, averagely N460 billion annually; creating huge market in Thailand, Taiwan and others. It is very clear that if we must continue to feed the growing population of almost 200 million, we cannot continue to import food. Obviously, rice is a staple crop and it is also even consumed by almost everybody in Nigeria, so we needed to focus on rice and drive it to an end where we can reduce our dependence. You can imagine even for beans, Nigeria spends N60 billion importing beans from Burkina Faso. So, obviously, somebody has to say we must put an end to this. And that’s why we took rice and drove it very strongly.

to produce poultry feeds. That’s why they are here from South Africa. So, in addition to your Banana plantation; the cocoa processing plant; the Rice mill in Ogoja; I can go on and on; but this tells you that we have a clear direction where we are going to. With about 200 million population, the prediction is that by 2050 Nigeria would be the 3rd most populated country in the world. What are you doing about feeding these people? You are doing nothing; you are waiting? Cataclysm is waiting. You have an implosion in your hand; you have this youth restiveness from unemployment. The mistake is that when people focus on infrastructure; which does not create sustainable jobs, it is nothingand that’s why industrialisation is the first step. You must create factories. You must have industries where young people will wake up and go to work. Until you do that you have failed and then you look at the population dynamics and demographics in Nigeria; in Cross River, in particular, 65 percent of our population are young people below the age of 35. So, if you don’t provide jobs when the biological urge comes for them to get married, they would get married; they get married, they have no house; no home; no income; you are actually requesting for armed robbers to be on the street. There’s a level of criminality in every one of us, once you are human. Existentialism theory preaches that everybody will do everything to exist; when pushed to the wall. I can’t allow them to be pushed to the wall. That’s why we are expanding government; creating horizons of jobs to ensure that we reduce tension in society.

Your Excellency, each time you travel out you always bring in investors; how do you do it? It is intellectual money. We have a lot of international contacts from my exposure from my private business. Take away the private business, look at my background from the Senate and now governor, I have a very long exposure in my private business outside the country; I have a lot of contacts. One of the major problems in this country is lack of sustainability; how are we sure that these legacies would be sustained by the administration that would succeed you, say in the next four to five years? That’s why I bought professionals (pointing to the white men surrounding him) from South Africa. These are professional farmers. We are taking agriculture beyond government. We are taking agriculture completely beyond the level that Nigerians are used to. We are really bringing in professionals who will take the value chain, being themselves investors. Your Excellency, we have been following endorsements from the three Senatorial districts of the state. People have been endorsing you for a new term; what is the secret of these endorsements? It is my capacity. It is a demonstration of my commitment. My responsibility is to find great potentials in young people and create a platform for them to elicit and discover themselves; that’s what I have done. I have created 4 (four) thousand jobs in Cross River State via the instrumentality of appointments alone Ayade

and now siting one factory per a local government area; creating again another set of jobs. Directly opposite us here (the Rice City where the interview took place) is the Garment Factory with three (3) thousand workers predominantly widows, young women who have lost their husbands; beside it we have the pharmaceutical factory; the other way you have the power plant; the list is endless. If I have created that level of jobs which is the real thing that we need now; whatever you are doing in Nigeria that does not focus on job creation, does not count; you can do road

from here to wherever but the road does not create jobs; the contractor makes his money and returns to his country; but really getting jobs for young people, to allow them emotional stability; reduce social pressure, and recalibrate the social temperature to allow people rediscover themselves, these are our concern and focus and that’s what I have done differently and that’s why various religious sects including politicians and different sociocultural groups have found it worthy to come to me and say ‘look, you must run again. Three years you have shown what you

are capable of doing and have shown great commitment’; that’s the essence of the endorsements. You have turned Cross River from civil service state to an industrial hub; what informed the passion for industrialisation? Again, it is the issue of job creation; job creation and job creation. There is nothing else that you can do that is more important than creating jobs. You have been able to put up the cocoa processing factory and the rice mill; and also a lot of other ongoing projects such as the Banana plantation. Where do you expect to see these

projects in the next four years? You have not seen anything yet (you see this team here – pointing to some foreigners around – this is an electrical engineer; his specialty is off-grid electricity. He is here to deal with the issue of power in our farms. This other person is a specialist in irrigation. He is here to ensure that we can plant all through the year. He is an agronomist; a core specialist in a specific area of grains; and in grains he is a super specialist in maize and soya bean; which is the main business of the day. You have seen how we are dressed; we are going to Obubra where we are setting up the largest yellow maize farm in Nigeria, with the field mill and processing plant

Your Excellency, you have been paying salaries when many other states are unable to do so; what is the secret? Intellectual money. It is a classic departure from the currency that you know. Where you don’t have money, your intellect will fill the space. That’s what we have done. What’s todays date (June 16th – when the interview was conducted). We have paid the salary for this June that we are in on 12th of June; because we paid May salary on the 1st of May. I can’t afford the agony of having my people to wait to the end of May and then to the end of June before they earn their

salaries; that would be stretching them for so long. So, we have made a choice to pay them before the15th of this month to reduce the harshness of waiting till the end of June. Now, where does this money come from? Because I am not indebted to any bank because I have never borrowed money. In any case, Cross River cannot borrow, because even before I came to the office, Cross River, Zamfara and Osun States were told they were insolvent and they cannot borrow. So, the Debt Management Office (DMO) at the Presidency will not allow Cross River to take a loan. So, what I have done is to bring intellectualism into governance. I am a professor; a lawyer and a senator, and a private businessman who has been a

I am not indebted to any bank because I have never borrowed money. In any case, Cross River cannot borrow, because even before I came to the office, Cross River, Zamfara and Osun States were told they were insolvent and they cannot borrow

multi-millionaire at the age of 23. So, I have seen money in extreme and I have seen poverty also. I am best balanced to drive Cross River State. It is that intellectual trip that I can fill up space where there is no fund, that’s what has given us the consistency to pay salaries. And because my own father was a civil servant, retired and died as one, it is clear to me that, I a child from a very humble background, understand what this salary means to them. So, I cannot put any other thing as priority; salary comes first in every thing I plan; and when salary is due; if it means dipping hands in my pocket to make sure salaries are paid; I will do so. What would you like to be remembered for by 2023? The intellectual sarcasm; the

shouting power of the intellect over money; the feeling that the young people deserve opportunity and that the young people can do well; and that you can bring them to governance and they can make a difference; that creating a platform for people who thought that government was exclusive but today they can see that young people can become commissioners; head parastatals; directors-general of agencies; and doing fantastically well; that’s what I want to be remembered for. I want to be remembered also for stamping out poverty and moving Cross River State from a civil service state to an industrialised state and my ambition is to move Cross R iver State from 3rd World to 1st world within my tenure.

BUSINESS DAY

C002D5556

Monday 25 June 2018

C002D5556

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: June 22 - June 29, 2018

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.95

Q1 2018 — lower by 0.11% compared to 2.11% in Q4 2017

Broad Money Supply (M2) (N’ trillion) Credit to Private Sector (N’ trillion)

24.52 22.25

Increased by 0.90% in Apr’ 2018 from N24.30 trillion in Mar’ 2018 Decreased by 0.85% in Apr’ 2018 from N22.44 trillion in Mar’ 2018

Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y) Monetary Policy Rate (%)

1.96 11.61 14

Increased by 17.31% in Apr’ 2018 from N1.67 trillion in Mar’ 2018 Declined to 11.61% in May’ 2018 from 12.48% in Apr’ 2018 Raised to 14% in July ’2016 from 12%

Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel)

14 (+2/-5) 47.63 75.82

Lending rate changed to 16% & Deposit rate 9% June 13, 2018 figure — an increase of 0.02% from June start June 22, 2018 figure— an increase of 0.77% in 1 week

Oil Production mbpd (OPEC)

1.71

May 2018 figure — a decrease of 3% from Apr’2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

NSE ASI

Friday

22/06/18

14/06/18

37,862.53

38,928.02

Change(%)

(2.74)

Market Cap(N’tr) Volume (bn)

13.72 0.17

14.10 0.34

(2.74) (50.32)

Value (N’bn)

1.43

5.25

(72.76)

MONEY MARKET NIBOR Tenor

Friday Rate

Change

(%)

(Basis Point)

22/06/18

14/06/18

OBB O/N

2.83 3.58

3.67 4.25

CALL 30 Days

3.29 13.40

16.88 15.11

(1358.8) (171)

90 Days

13.50

15.35

(184.8)

(84.0) (67)

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

22/06/18

14/06/18

22/05/18

Official (N) Inter-Bank (N)

305.85 343.87

305.90 342.71

305.90 340.12

BDC (N) Parallel (N)

359.81 362.00

360.99 362.00

360.00 364.00

Indicators

Friday

Change

(%)

(Basis Point)

22/06/18

14/06/18

3-Year 5-Year

0.00 13.33

0.00 13.24

0.0 8.3

7-Year 10-Year 20-Year

13.04 13.48 13.81

12.67 13.23 13.59

36.8 24.4 22.0

Tenor

(%)

75.82 2.95

0.77 0.34

17.62 (3.47)

2485.00 117.35 84.96 12.49 501.25

2.94 (1.26) (8.93) (2.12) (4.71)

28.36 (9.87) 9.63 (18.53) 15.63

1270.15 16.41 304.15

(2.20) (3.19) (6.04)

(3.60) (4.54) (7.21)

Friday

Change (Basis Point)

(%)

(%) 14/06/18

1 Mnth 3 Mnths

12.43 12.18

12.26 11.64

17 55

6 Mnths 9 Mnths 12 Mnths

12.86 13.11 12.93

12.61 13.11 12.95

25 (0) (1)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Index

Friday

Change

(%)

(Basis Point)

22/06/18

14/06/18

2,677.34

2,685.72

(0.31)

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr) YTD return (%)

9.10 5.88 8.99

9.17 5.94 9.33

(0.70) (0.94) (0.34)

YTD return (%)(US $)

-46.26

-45.95

(0.31)

TREASURY BILLS (MATURITIES)

Disclaimer

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

YTD Change

22/06/18

Tenor This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

1-week Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

AVERAGE YIELDS Friday

22/06/18

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Gold ($/t oz.) Silver ($/t oz.) Copper ($/lb.)

BOND MARKET Tenor

Global Economy In the U.K., the Bank of England left its key bank st rate unchanged at 0.5% at its June 21 2018 meeting. In the Monetary Policy Committee’s most recent projection, the gross domestic product (GDP) is expected to grow by an average of 1.75% each year over the forecast period. The Committee also voted to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves at 10 billion pounds. They also voted to keep the stock of UK government bond purchases, financed by the issuance of central bank reserves at 435 billion pounds. Moving on to East Asia, Japan’s inflation rate climbed to 0.7% year-on-year in May 2018 from 0.6% in the previous month. Prices rose at a faster pace for food and transport, it however fell for housing. Japan’s statistics agency revealed that food index peaked by 0.8% in May from 0.7% in April while the core sub-index (excluding the prices of agricultural produce) stood at 0.7%, same as the preceding month. Month-on-month, consumer prices accelerated at a slower rate of 0.1% when compared to 0.4% in the previous month. In South America, the Central Bank of Brazil maintained its key policy rate at 6.50% during its June 20, 2018 meeting. The Committee reiterated at its meeting that economic conditions prescribe accommodative monetary policy.

91 Day 182 Day 364 Day

Amount (N' million) 6,217.066 50,000.00 124,640.724

Rate (%)

Date

10.4662 14-June-2018 11.0801 13-June-2018 12.9897 13-June-2018

Local Economy The apex Bank in its Credit Conditions Survey report for Q2 2018 reported that the availability of secured credit to households increased during the second quarter of the year due to increased liquidity position. The demand for secured lending by households also rose during the quarter under review. The proportion of loan applications that were approved increased despite lenders’ maintaining the same credit scoring criteria. It was also reported that the availability of unsecured credit to households increased during the reference quarter as well as the demand for unsecured lending from households. The availability of credit to the corporate sector increased as well as the demand for corporate credit across all firm sizes during the quarter. Regarding loan defaults, secured loan performance as measured by default rates improved in the review quarter while total unsecured loan performance to households worsened in Q2 2018. Corporate loan performance improved across all firm sizes. Regarding loan pricing, lenders reported that the overall spreads on secured lending rates on approved new loans to households relative to Monetary Policy Rate (MPR) remained unchanged in Q2 2018. The spreads on overall unsecured lending also remained static in the reference quarter. Stock Market Trading activities at the Nigerian Stock Exchange plunged in the week ended June 22, 2018. The bearish performance was due to profit taking. The All Share Index (ASI) plummeted by 2.74% or 1,065.49 points to 37,862.53 from 38,928.02 points the previous week. Likewise, market capitalization declined by 2.74% to N13.72 trillion from N14.10 trillion the preceding week. The performance was influenced by losses in the stocks of companies in the industrial goods sector. This week, investors may begin to reposition in anticipation of the release of listed companies’ half year scorecards. Money Market Liquidity prevailed at the money market last week causing rates to decline across most

tenors. Inflows from Open Market Operation (OMO) maturity flooded the market with no corresponding OMO auction to mop up liquidity during the week. Open Buy Back (OBB) and the Over Night (O/N) rates slipped to 2.83% and 3.58% from 3.67% and 4.25% respectively the previous week. Longer tenured interbank rates also dropped. The 30day and 90-day Nigerian Interbank Offer Rates (NIBOR) settled at 13.40% and 13.50% from 15.11% and 15.35% respectively. This week, rates may trend northwards due to expected Retail Secondary Market Intervention Sales (SMIS). Foreign Exchange Market The naira rates recorded varying performances at the different segments of the market. The interbank window depreciated marginally to N343.87/$ from N342.71/$ representing a drop of N1.16kobo. The parallel market rate remained stable at N362/$. However, the official rate appreciated marginally by 5 kobo to settle at N305.85/$ from N305.90/$ the previous week. The appreciation and stability recorded in the parallel and official market segments may be attributed to the apex bank’s regular efforts to boost FX liquidity and alleviate dollar shortages. This week, we envisage the stability in the market would continue due to consistent FX liquidity by the CBN. Bond Market Average bond yields ascended in the week ended June 22, 2018 as local and international counterparties increased supply in the market. Yields on the five-, seven- and ten- year debt papers finished at 13.33%, 13.04% and 13.48% from 13.24%, 12.67% and 13.23% respectively the previous week. The Access Bank Bond index dived by 8.38 points or 0.31% to close at 2,677.34 points from 2,685.72 points the previous week. This week bond yields may decline depending on the volume of bonds sold at the expected auction and the rate at which they are auctioned. Commodities Oil prices spiked last week, as the Organization of the Petroleum Exporting Countries (OPEC) made efforts to conclude on the deal to increase output to compensate for losses in production at a time of rising global demand.Bonny light, Nigeria’s benchmark crude, settled higher at $75.82 per barrel, up 58 cents, or 0.77%, from the previous week. In contrast, the prices of precious metals plunged last week, weighed down by a firm dollar and the possibility of higher interest rates in the U.S. Gold lost 2.2% or $28.55 to settle at $1,270.15 per ounce. Silver also dropped by 54 cents, or 3.2%, to settle at $16.41 an ounce. This week, oil prices would be determined by the decision taken by OPEC and Russia at the Vienna meeting, as a more relaxed policy may push prices lower to $70 per barrel and a restrictive measure may support crude prices towards $80 per barrel mark. Precious metals prices may likely remained pressured due to expectations of additional rate hikes by the US Fed as well as the strengthening dollar.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Jun’18

Exchange Rate (Official) (N/$)

Jul’18

Aug’18

Inflation Rate (%)

344.80

345

346.02

11.00

10.50

Crude Oil Price (US$/Barrel)

10.20

75.2

75.9

For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

BUSINESS DAY

Monday 25 June 2018

This is M NEY A daily guide to your Personal Finance

• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

Prospecting clients, here are the laws Iyore Ogbuigwe

unning a business can be hectic but the real nerve-wrecker is getting clients. Getting and keeping clients can sometimes feel like a dead-end but it doesn’t have to be. As a seasoned sales coach who has worked with numerous businesses to build and strengthen their sales teams; I have learnt a few laws of sales which I have used in my business and helped my clients implement as well. The results are phenomenal. Here are 14 powerful and unbreakable laws you should follow diligently if you also want to breakthrough in sales: 1. The law of possibility – This law states that, if you’re relentless to win, life will make a way for you. For your prospecting to be effective, it is imperative you have a goal and you’re absolutely relentless to meeting that goal. What’s the sales goal for your product, in terms of units to be sold and income to be generated? Decide what the goal is then go for it. You must believe in yourself and in your abilities to perform. You must believe you have the ability to get any goal you set (because you can!!). You must make a commitment to do all it takes to win, giving no room for excuses. Excuses are simply good reasons for poor results. Unless this audacity to win is settled within you then your prospecting journey won’t be sweet.

2. The law of purpose – This law states that, understanding that your product can change the world is the key to unlimited sales. We all want to be a part of something that’s bigger than us, something that makes us feel we are impacting the lives of others; making the world better than we met it. Your product has the capacity to achieve this great feat. This is because products don’t have a life of their own, we are the ones who give our products substance, value, relevance and of course the opportunity for impact. Let me give you an example of what I mean by impact. Let me give you an example of what I mean by impact. You sell real estate and you sold a property to a man. In a few years the value of the property appreciated by 100%, this gave the man an opportunity to sell it and reinvest the money. Hence, wealth came into his family. The man handed it over to his son and the cycle of wealth continued, creating a generation of wealth all through their lineage; with this money they were able to do a lot of good things for themselves and for a lot of other people e.g. opened an orphanage to help homeless children. 3. The law of the first statement – This law states that, in a busy world, your first statement must grab the prospect’s attention, then elicit the response, “tell me more.” Your first statement should be a summary of the value you offer. When I meet clients I used to say, “Hello my name is Iyore and I train businesses on how to sell when no one wants to buy so they can make more money.” This should elicit a response, “tell me more.” Finding your value state-

ment- which is your attention grabbing statement- is gotten by identifying the end result of the value you give then walking backwards to craft the value process. For example what is the end result of people buying your furniture, comfort? With comfort comes what? Happiness. So the end result is happiness. Now walk backwards as I mentioned earlier by identifying the value process used to produce this happiness. For furniture it could be bespoke furniture or readymade furniture then having identified the value process, choose your niche. For example your niche could be salaried individuals. With all these your value statement will then be, “I help salaried individuals through bespoke furniture achieve happiness.” Your first statement could also be a question, for example, “a lot of clients have called me lately to thank me for making their lives easier, would you want to know why?” The prospect can then say, “okay, tell me why.” Then you begin selling from there.The strength of your attention grabbing statement is not in its complexity but in the response it provokes from the prospect. 4. The law of existing clients – This law states that, prospects associate the quality of your product to the quality of existing clients you serve. At one of my sales seminars a participant complained that he hadn’t been able to get high paying clients to buy his product. I then asked him a question, “How many high paying clients do you currently do business with?” He replied, “None.” That was his problem. I’m sure you’re wondering, “How do you expect him to get high pay-

ing clients?” The answer is, do some jobs for free and let it be known that you do business with those clients. No one cares if they paid you or not all they know is you do business with them. So, using the furniture value statement mentioned earlier you can say, “I help salaried individuals through bespoke furniture achieve happiness. I have done this for staff of Google, Oracle and Standard Chartered Bank.” 5. The law of the testimonial – This law states that, what clients say about your product will greatly influence the prospect’s expectation of your product. Become eager to get as many testimonials as you can. Get testimonials in all formats including written, video and audio. Sometimes you may have to write testimonial letters yourself with the client’s permission (if they’re too busy) so they can just sign. If you’re new to selling, test the market with your product, get feedback and testimonials based on the results people got from your product. So again, using the furniture value statement mentioned earlier you can say, “I help salaried individuals through bespoke furniture achieve happiness. I have done this for staff of Google, Oracle and Standard Chartered Bank. Here is what some of them have to say………” In some cases you can close the sale after this statement by asking, “would you like this to be your experience too?” For video testimonials you can simply use your phone to record the testimonials 6. The law of presence – This law states that, it is easier to get rid of a phone

call than it is to get rid of a human body. When using the telephone, remember it is not to close a sale especially if you don’t receive payments or deliver your product to prospects over the telephone. Rather the aim of the telephone is to book an appointment. This is why you shouldn’t yield to pressure from prospects that try to press you into telling them about your product over the phone. A lot of times they do that because they are looking for a reason to disqualify you. Rather, be pleasant and insistent asking for just 3 minutes of their time to show them what you have to offer. Great prospects are busy, poor prospects have all the time to give you, so the greater the resistance in getting the appointment, the happier you should be. Here is a sample phone conversation to book an appointment on the telephone: YOU: “Good afternoon Mr. Prospect, I….(introduce yourself applying the law of the first statement here). Can I meet with you for 3 minutes; there is something I would like to show you? (When you meet the prospect you can show them your brochures, product, testimonial letters, videos or just get a sheet of paper and describe in financial terms what they stand to benefit especially if you sell intangible products like services) Mr prospect: “What is it?” YOU: “I wish I could say it over the phone but it’s really important I show you, I promise I won’t use more than 3 minutes of your time because I know you’re really busy” *The reason you want to meet with the prospect is

because the moment you’re face to face with a prospect and you’re well dressed, confident in yourself and in your product, you become far more persuasive and difficult to resist. Unlike a phone call where all the prospect has to do is turn it off. 7. The law of one client: There is a principle of life which states that, “what you look for, you’ll find”. A lot of times our beliefs about what is possible is where our limitations are. Another principle is, “whatever you’ve come to believe and accept as possible will be your reality”. One client can turn around your business; one client might be the missing link between where you are and where you want to be. The question is, will you recognize this client when you see him or her? Big things can come in small packages. I was at a seminar a few months ago where a real estate business mogul said his business turned around because of one client. He walked up to her at the airport and introduced himself. He said he admired what she was doing for our nation and gave her his business card. A few months later she called him asking to purchase four luxury properties that day. Iyore Ogbuigwe is a highly sought after sales and persuasion expert for local, international and multinational corporations. Iyore is the CEO of Ultravantage& Founder of the Iyore Ogbuigwe Sales Academy (IOSA). He holds sales seminars in Nigeria, Ghana and the USA and has written 5 books on selling. Connect with Iyore: Emailadmin@iyoreogbuigwe.com Instagram & Twitter: @ iyoreogbuigwe

Monday 25 June 2018

C002D5556

BUSINESS DAY

Monday 25 June 2018

Live @ the Stock exchange Prices for Securities Traded as of Thursday 22 June 2018 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 300,850.90 10.40 0.48 78 782,139 362,513.87 10.60 -0.93 108 1,124,573 UNITED BANK FOR AFRICA PLC ZENITH INTERNATIONAL BANK PLC 813,169.19 25.90 0.78 228 4,164,696 414 6,071,408 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 382,284.87 10.65 0.47 244 10,564,240 244 10,564,240 658 16,635,648 BUILDING MATERIALS DANGOTE CEMENT PLC 3,834,114.17 225.00 -2.30 135 1,088,459 338,263.70 39.00 -2.50 58 656,926 LAFARGE AFRICA PLC. 193 1,745,385 193 1,745,385 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY LTD 403,084.52 685.00 - 34 21,901 34 21,901 34 21,901 885 18,402,934 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 1 18 OKOMU OIL PALM PLC. 89,858.32 94.20 4.43 19 321,859 PRESCO PLC 73,500.00 73.50 - 16 71,900 36 393,777 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 2,370.00 0.79 -4.82 13 350,373 13 350,373 49 744,150 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 1,297.17 0.49 - 5 26,095 JOHN HOLT PLC. 221.82 0.57 - 1 1,294 2,111.93 3.25 - 2 1,676 S C O A NIG. PLC. TRANSNATIONAL CORPORATION OF NIGERIA PLC 59,346.07 1.46 -2.67 96 6,160,959 U A C N PLC. 40,482.22 14.05 -2.43 36 505,434 140 6,695,458 140 6,695,458 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 36,300.00 27.50 - 10 37,060 ROADS NIG PLC. 165.00 6.60 - 0 0 10 37,060 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT CO. LIMITED 5,222.78 2.01 -4.74 12 209,138 12 209,138 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 0 0 11,300.89 45.20 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) UPDC REAL ESTATE INVESTMENT TRUST 26,682.70 10.00 - 0 0 0 0 22 246,198 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 1,431.80 0.30 - 3 47,487 3 47,487 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 15,658.99 2.00 - 5 12,403 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 213,562.32 97.50 - 24 37,383 INTERNATIONAL BREWERIES PLC. 378,217.93 44.00 - 5 26,570 NIGERIAN BREW. PLC. 883,657.68 110.50 -1.34 66 286,163 100 362,519 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 52,500.00 10.50 0.48 72 2,793,128 DANGOTE SUGAR REFINERY PLC 228,000.00 19.00 - 51 275,959 FLOUR MILLS NIG. PLC. 127,111.77 31.00 -1.27 108 3,969,297 HONEYWELL FLOUR MILL PLC 16,574.11 2.09 -8.33 265 19,347,663 MULTI-TREX INTEGRATED FOODS PLC 1,489.00 0.40 - 0 0 N NIG. FLOUR MILLS PLC. 1,167.21 6.55 - 0 0 NASCON ALLIED INDUSTRIES PLC 60,274.72 22.75 - 21 1,398,020 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 517 27,784,067 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 24,416.63 13.00 - 17 60,803 NESTLE NIGERIA PLC. 1,185,021.10 1,495.00 - 17 2,792 34 63,595 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 3,189.65 3.06 -3.47 36 3,881,705 36 3,881,705 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 79,211.02 19.95 - 4 9,211 UNILEVER NIGERIA PLC. 291,559.02 50.75 -4.25 33 237,790 37 247,001 727 32,386,374 BANKING DIAMOND BANK PLC 35,435.40 1.53 1.31 42 2,664,777 ECOBANK TRANSNATIONAL INCORPORATED 370,660.93 20.20 - 35 123,663 FIDELITY BANK PLC 66,062.54 2.28 -0.44 254 26,630,084 GUARANTY TRUST BANK PLC. 1,197,848.99 40.70 1.62 248 7,812,805 JAIZ BANK PLC 19,741.05 0.67 4.69 11 557,195 SKYE BANK PLC 9,577.41 0.69 -1.43 90 4,199,553 STERLING BANK PLC. 39,154.97 1.36 -1.45 39 4,806,548 UNION BANK NIG.PLC. 171,812.44 5.90 - 46 321,023 UNITY BANK PLC 10,286.62 0.88 -1.12 14 591,541 WEMA BANK PLC. 27,773.62 0.72 1.41 42 3,216,453 821 50,923,642 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE COMPANY PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,227.42 0.61 1.67 25 1,242,200 AXAMANSARD INSURANCE PLC 29,190.00 2.78 - 5 60,972 CONSOLIDATED HALLMARK INSURANCE PLC 2,100.00 0.30 - 4 514,455 CONTINENTAL REINSURANCE PLC 14,833.02 1.43 - 0 0 CORNERSTONE INSURANCE COMPANY PLC. 5,155.33 0.35 - 3 4,766 EQUITY ASSURANCE PLC. 3,220.00 0.23 4.55 15 368,428 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 GREAT NIGERIAN INSURANCE PLC 1,913.74 0.50 - 0 0 GUINEA INSURANCE PLC. 2,333.20 0.38 - 0 0 INTERNATIONAL ENERGY INSURANCE COMPANY PLC 539.32 0.42 - 3 3,338 LASACO ASSURANCE PLC. 2,489.97 0.34 -2.86 16 2,133,855 LAW UNION AND ROCK INS. PLC. 3,694.84 0.86 - 2 46,300 LINKAGE ASSURANCE PLC 6,960.00 0.87 - 8 218,954 MUTUAL BENEFITS ASSURANCE PLC. 2,800.00 0.35 - 10 59,702 N.E.M INSURANCE CO (NIG) PLC. 16,052.73 3.04 4.83 39 9,327,199 NIGER INSURANCE CO. PLC. 1,934.87 0.25 4.00 8 411,715 PRESTIGE ASSURANCE CO. PLC. 2,519.49 0.66 - 3 90,500 REGENCY ALLIANCE INSURANCE COMPANY PLC 1,733.88 0.26 - 7 46,500 SOVEREIGN TRUST INSURANCE PLC 2,585.66 0.31 6.90 13 1,428,113 STANDARD ALLIANCE INSURANCE PLC. 5,422.63 0.42 - 2 6,696 STANDARD TRUST ASSURANCE PLC 4,483.72 0.48 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 3 11,334 UNIVERSAL INSURANCE COMPANY PLC 8,000.00 0.50 - 0 0 VERITAS KAPITAL ASSURANCE PLC 4,298.67 0.31 - 3 147,000 WAPIC INSURANCE PLC 6,691.37 0.50 4.17 77 7,558,650 246 23,680,677

Company MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 4,115.95 1.80 - 23 604,521 NPF MICROFINANCE BANK PLC 23 604,521 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 5,460.00 1.30 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 5,922.05 1.42 - 0 0 INFINITY TRUST MORTGAGE BANK PLC RESORT SAVINGS & LOANS PLC 5,664.87 0.50 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,000.00 4.00 - 62 1,017,566 CUSTODIAN AND ALLIED PLC 30,938.61 5.26 - 11 24,476 DEAP CAPITAL MANAGEMENT & TRUST PLC 720.00 0.48 - 0 0 43,367.94 2.19 -3.95 58 1,844,137 FCMB GROUP PLC. NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 1,800.88 0.35 - 1 5,000 ROYAL EXCHANGE PLC. SIM CAPITAL ALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 STANBIC IBTC HOLDINGS PLC 489,911.45 48.75 - 16 189,995 19,320.00 3.22 2.22 195 15,578,107 UNITED CAPITAL PLC 343 18,659,281 1,433 93,868,121 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 1,350.19 0.38 - 1 50 1 50 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 9,000.00 6.00 - 4 34,430 GLAXO SMITHKLINE CONSUMER NIG. PLC. 22,960.83 19.20 - 14 30,048 2,401.00 2.45 - 14 136,679 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 984.11 0.57 -5.00 13 465,894 556.71 3.62 - 0 0 NIGERIA-GERMAN CHEMICALS PLC. PHARMA-DEKO PLC. 477.00 2.20 - 3 17,678 48 684,729 49 684,779 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 0 0 0 0 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 100 680.40 6.30 - 1 100 NCR (NIGERIA) PLC. TRIPPLE GEE AND COMPANY PLC. 435.56 0.88 - 4 17,638 6 17,838 PROCESSING SYSTEMS CHAMS PLC 1,737.54 0.37 - 1 8,500 19,110.00 4.55 - 0 0 E-TRANZACT INTERNATIONAL PLC 1 8,500 7 26,338 BUILDING MATERIALS BERGER PAINTS PLC 2,477.99 8.55 - 5 2,667 25,760.00 36.80 - 1 1,000 CAP PLC 31,102.77 24.75 3.13 47 301,371 CEMENT CO. OF NORTH.NIG. PLC FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 2 15,000 MEYER PLC. 361.24 0.68 - 5 86,092 PAINTS AND COATINGS MANUFACTURES PLC 467.82 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,626.50 2.05 - 0 0 PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 60 406,130 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,765.28 3.14 - 9 155,258 9 155,258 PACKAGING/CONTAINERS BETA GLASS PLC. 43,147.58 86.30 - 6 1,504 GREIF NIGERIA PLC 388.02 9.10 - 0 0 6 1,504 75 562,892 CHEMICALS B.O.C. GASES PLC. 1,752.39 4.21 - 2 2,500 2 2,500 METALS ALUMINIUM EXTRUSION IND. PLC. 2,023.60 9.20 - 2 722 2 722 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 74.80 0.34 - 0 0 0 0 4 3,222 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 2,943.47 0.47 2.13 92 8,426,001 92 8,426,001 INTEGRATED OIL AND GAS SERVICES OANDO PLC 81,425.75 6.55 -1.50 96 1,428,606 96 1,428,606 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 65,988.93 183.00 - 29 43,252 CONOIL PLC 20,818.56 30.00 - 9 4,665 ETERNA PLC. 8,802.98 6.75 -4.93 13 173,909 FORTE OIL PLC. 44,349.48 34.05 -4.89 63 318,810 MRS OIL NIGERIA PLC. 8,699.11 34.25 - 3 1,126 TOTAL NIGERIA PLC. 65,629.57 193.30 - 7 1,065 124 542,827 312 10,397,434 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 20,866.39 2.14 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 541.12 0.46 - 2 740 2 740 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,507.51 5.95 - 4 30,000 TRANS-NATIONWIDE EXPRESS PLC. 379.77 0.81 - 0 0 4 30,000 HOSPITALITY TANTALIZERS PLC 1,156.19 0.36 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 6,506.63 3.13 - 18 179,600 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 56,623.01 7.45 - 0 0 18 179,600 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 5,760.00 0.48 - 3 16,834 3 16,834 PRINTING/PUBLISHING ACADEMY PRESS PLC. 302.40 0.50 - 0 0 LEARN AFRICA PLC 1,164.89 1.51 -4.43 11 216,797 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0

Monday 25 June 2018

C002D5556

BUSINESS DAY

FEATURE

How Buhari’s social fund for MSMEs attempts to bridge the ‘credit gap’ GODFREY OFURUM

he big companies get all the banking credit in Nigeria, with the top 100 companies in the country said to corner 90 percent of banking credit. If you are small business, you have a small chance of accessing credit. This credit gap between the big and small business is what President Muhammadu Buhari’s Government Enterprise and Empowerment Program (GEEP)is seeking to bridge. Unable to access finance from the formal sector, businesses in the informal sector have always struggled. But this may be changing with the progress being reported by the GEEP initiative. GEEP is one of the National Social Intervention Programmes (NSIP) of the current administration, providing interest free-loans of between N10,000 and N100,000 to market women, farmers, artisans and enterprising youths nationwide through the Bank of Industry. GEEP is targeted at developing Micro, Small and Medium Scale businesses and now claims to have reached over 400, 000 beneficiaries in the last two years of its operation. This was disclosed by the Project Lead Toyin Adeniji, who said the initiative remains a benchmark for funding MSME across the globe. Adeniji, in a recent chat with the media explained that to be a beneficiary of GEEP and access MarketMoni loan, as the programme is otherwise called, the first step is to have a bank account with BVN. “Would-be beneficiary must also belong to an accredited market association or cooperative registered in your state or with the CAC. Thirdly, your association or cooperative must indicate its interest in MarketMoni by submitting its information to BOI including its certificate of registration.” “If your association or cooperative qualifies, a MarketMoni agent would be sent to your group promptly to capture your members for loan assessment. It is as simple as that.” Explaining what GEEP is out to achieve, Adeniji said: “GEEP Market Moni is an initiative designed to support small businesses in markets across the country. Access to finance constitutes a major issue in developing world, Nigeria in particular. But in the last two years, GEEP has grown into one of the largest MSMEs support initiative in the world.” She further explained that the administration of President Buhari, in its resolve to support and accelerate economic activity of MSMEs, the federal government, established GEEP which is also called MarketMoni, because of the loans it gives out. According to her, GEEP gives beneficiaries interest-free loans to market women and traders, artisans, youth and farmers. “Many of us for this palm oil business fit buy only on keg. As dis government loan come, we dey buy 3 or 4 kegs. Business dey move” Mrs

Oluwawomi, a palm oil seller and one of the beneficiaries of GEEP on Osun state said. Vice President Yemi Osinbajo has been driving the GEEP programme across the country and has been holding Micro, Small and Medium-Scale Enterprise (MSME) Clinics in different parts of the country to sensitize Nigerians about the scheme. Speaking at Edo State’s edition of the MSME Clinics during his two-day working visit to the state recently, Vice President Osinbajo disclosed that over 4,000 people have benefitted from GEEP in the state. “The federal government of Nigeria, through Bank of Industry has empowered over 4,000 Edo state people with loans, and 350,000 persons have so far benefitted from the programme nationwide”, he said Osinbajo explained that “the policy of the Federal Government is to support businesses, not just big business but particularly small, medium-sized businesses and microbusinesses. The whole idea is that we want to ensure that we give whatever support whether it is cash, advise or even registration to all of our small and medium enterprises.” He also disclosed that the federal government has concluded plans to roll out TraderMoni scheme, a new micro-credit scheme to cater for ultramicro enterprises in addition to the existing GEEP MarketMoni scheme, which targets market women, traders, artisans and enterprising youths. TraderMoni, he explained, is a different scheme from MarketMoni because TraderMoni is for the smaller traders. These are the hawkers; those who are doing little things where in many cases their inventory, the whole thing they are selling is sometimes not

even more than N5,000 to N10,000. We want to give those kinds of people some credit as well and once they pay back, we will give them some more money. “I thank the president for this loan. I collected N100,000 and it was very quick. I got a new machine, said Edith Nwosu, a tailor in Anambra state. The GEEP programme covers the 36 states of the federation. Uzoma Nwagba, GEEP MarketMoni Chief Operating Officer, explained that GEEP is geared towards addressing one of the tough challenges of microenterprises in Nigeria, which is access to finance. Nwagba, argued that the pro-poor programme would improve the economic wellbeing of the beneficiaries as well as inflate the economy from the grassroots. Toyin Adeniji, the Executive Director of Financial Inclusion in BOI, added that the pilot phase of the TraderMoni scheme has already began, with 368 traders in Edo State, each walking home with N10,000 after the event. She said BOI is making every effort possible to enhance the scope of the program and bring in more beneficiaries. She explained how the programme has impacted positively on the economic status of the beneficiaries to include improvement in businesses, job creations among others. “Beneficiaries of the GEEP loan have been able to improve their businesses. Some of them from a one-man shop now employ six people; those who buy things in small units now buy in bulk. It is a very aggressive scheme and we have a target to reach over a million. As at now we have disbursed loans to over 350,000 beneficiaries na-

tionwide, and to scale up the scheme, we have identified and categorised a new group of micro traders who need only about N10,000 to boost their businesses.” “GEEP MarketMoni loans are repayable over a period of 6 months with a five percent administrative charge. To ensure that the loan instalments are paid on time and conveniently, collections begin from the third week after loans are received. Beneficiaries enjoy a two-weeks grace period”, she added. To assess the impact of the scheme, Vice President Yemi Osinbajo, in May met with a section of about 12,000 beneficiaries from Kano State during the state’s edition of MSME Clinic. Speaking at the event, Special Assistant to the Vice President on MSME, Tola Johnson, said “The best thing that has happened to micro businesses in Nigeria is the GEEP MarketMoni programme. It has dealt with their collateral challenge because all they need is their data, a bank account and Bank Verification Number (BVN).” Explaining the rational for the scheme, Johnson said that out of the 37 million small businesses in Nigeria, 36.9 million are microenterprises. “This informed the Federal Government’s attention to this space. Micro enterprises are responsible for almost 50 per cent of the country’s Gross Domestic Product and 80 per cent of the workforce.” Most of GEEP beneficiaries are women, some of whom are widows and single mothers. The programme is improving the quality of their lives, their children’s lives, their health and even education. Speaking with journalists in Kano, the Head of Agent Networks, Sherifat Abdullahi, who interacts directly with

agents, association heads and the beneficiaries said, “Apart from the 350,000 direct beneficiaries across the country, it has created employment opportunities for over 5,000 Nigerians who act as MarketMoni agents, some of whom are graduates, previously unemployed.” Sherifat added, “As someone who has direct contact with the beneficiaries, this has been a very emotional journey for me, watching how this interest-free loan scheme is changing the lives of people, especially women and the vulnerable. We truly appreciate the Federal Government for doing this.” The National Bureau of Statistics reports that there are at least 37 million MSMEs in Nigeria, 85 per cent of which lack access to funding. It is in a bid to address this challenge headon that the President Muhammadu Buhari-led administration established MarketMoni - the Government Enterprise and Empowerment Programme (GEEP), a social intervention programme aimed at reinvigorating the economy at the base of the pyramid, the hotbed of Nigeria’s financially vulnerable. To benefit from the scheme, applicants just need to apply through their registered Market Associations and Cooperatives, have a Bank Verification Number(BVN), and a mobile phone. The loans range from N10,000 to N100,000, and are expected to be repaid within a 6-month period without interest. Apart from GEEP MarketMoni, the three other Social Investment Programmes embarked on by the Federal Government include the School feeding programme, Conditional Cash Transfer to less privileged and N-Power.

BUSINESS DAY

C002D5556

Monday 25 June 2018

Diamond Bank partners CBN, others to drive financial inclusion with digital pay expo 2018

he need to bridge the gap in providing financial services to the unserved market segment has once again been highlighted with the launch of the annual Digital Expo conference and exhibition held in Lagos recently. In his keynote address, Chief Executive Officer of the Bank, Uzoma Dozie, who was represented by the Executive Director -Business Development, Chizoma Okoli, highlighted the importance of identifying the key requirements of the unbanked and unserved market segment as this will enable financial institutions to develop and create products targeted at meeting those needs. She stated that the Bank was already thinking along these lines and listed some of the steps Diamond Bank has taken to ensure that financial services are available to all. “Part of our activities in this space include the development of products such as the BETA and CLOSA accounts. BETA targets market traders and also supports small and medium enterprises (SMEs). The BETA account employs agents (called BETA friends) who go to the areas of comfort of these market traders and offer them all the financial services they need without impacting on their way of life, whilst the CLOSA account was created for those without Banks in their areas. People of influence in

L-R: Bashiru Idris, head, Competition & Tarif, Nigerian Communications Commission; Musa Jimoh, head, payment Systems, Overside; Chizoma Okoli, executive director, Diamond Bank plc; Nish Kotecha, founder, Geosansar; and Isaac Ondieki, managing director, Microsave, Africa at the opening ceremony of Digital Pay Expo 2018 held at Eko Hotel, Lagos recently.

the community were selected to act as agents of the bank to ensure trust and those in the community were assured that the Bank would assume responsibility for their money once it was deposited with the agents”, stated Chizoma. Themed: Innovative Financial Services for the Vast Unserved Segments, the conference is designed as an inclusive series addressing

different segments of digital financial services with focus on how such services can leverage on technology to bring access to the markets at the bottom of the pyramid. Speaking on behalf of the Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, Head, Competition and Tariffs of NCC, Mr. Bashiru Idris, noted that

the commission has been in the forefront of promoting financial inclusion through the provision of proper information technology infrastructure. He said, “In the past, money orders and the use of intra-city transport was used to send money down to those in the hinterlands but the growth in the telecommunications industry and that of

financial services has overtaken these methods. He, however there still remains areas of improvement in these areas.” He concluded by saying the Commission would not relent in its quest of ensuring an enabling environment for the financial industry through the provision of efficient information technology infrastructure.

ImpactHER trains Women to scale up business, access capital

n what seems to be a way of promoting financial inclusion, a non-profit, female centric organisation, ImpactHER, has successfully concluded the training of female African entrepreneurs on how to access finance from corporate organisations for the growth of their business. The training conference held recently in Canton Concourse, Maroko, Lagos, saw over 100 women engaged in different

lines of business in attendance. In her remarks, Founder, ImpactHER, Efe Ukala, explained that the foundation was created to help bridge the financing gap inhibiting female African entrepreneurs in their quest for entrepreneurial success. “It is to help prepare African female entrepreneurs to access institutional capital to fund and grow their businesses,” she said. ImpactHER, is a nonprofit organization aimed at train-

ing women on how to build scalable businesses and be investor-ready. The conference organised with support from Google Digital Skills for Africa, and Haptics, offered them the opportunity to meet with great business experts and coaches who took them through ways to build scalable businesses and be investor-ready, and also addressed some of the diverse issues faced by Nigerian female entrepreneurs.

Addressing the women at the event, the Regional Bank Head, Victoria Island, Fidelity Bank, Chinwe Iloghalu, used the opportunity to introduce to them some special products available to female-led businesses, and advised them on practical ways through which they can access debt financing from banks and other financial institutions. In her presentation, one of the facilitators and Regional

Head, Africa Venture Capital, International Finance Corporation, World Bank, Wale Ayeni, revealed to the participants myriad of business funding opportunities which they could tap into in order to take their businesses to the next level. On her part, Founder, Nuts About Cakes, Olanike Majekodunmi, shared with the women, practical tips on how to build best-in-class businesses, amongst others.

BUSINESS DAY

Monday 25 June 2018

Start-Up Digest

In association with

Abioye and Ladi: Providing quality meals for Nigerians Stories by JOSEPHINE OKOJIE

very entrepreneur in Nigeria has a unique story to tell and usually an inspirational story of how his or her own personal entrepreneurial journey started. For Abioye Tunde-Anjous and Ladi Oshinaike, co-founders of SirChefs Food and Beverage, their food inspiration came directly from the personal stories of the employees they found around them. SirChefs Food and Beverage is a real celebration of Nigeria’s food industry, with its essence created from local and traditional ingredients that are unique. Through its Breakfast King brand, Abioye and Ladi provide Nigeria’s Pap (popularly called Ogi or akamu) and Akara (bean cake) in cups. The pack enables employees and people with busy schedules to take breakfast quickly and regularly. “The idea behind our business came when we were both working with the health insurance industry. As a pharmacist, one of my roles in my former organisation was to talk to employees about their health and each time I asked if they had taken breakfast, I got a ‘no’ response from most of them,” Abioye says. “Living a fast-paced lifestyle is often why workers often skip their breakfast. Knowing that breakfast is the most important meal of the day and how it can make workers productive, I decided to fill the gap by providing them the right meal for breakfast,” Abioye states. After doing some research on what the ideal breakfast could be, Abioye shared his idea with Ladi, his friend and colleague then, who bought into it and in 2017 they established SirChef Food and Beverage. “We identified that even if there were options available for breakfast, they were not very healthy, and

Ladi Oshinaike and Abioye Tunde-Anjous

the ones that were healthy, you find them very expensive. So we felt we could make the food available and affordable ,” Ladi discloses. Abioye and Ladi started their business with the money they raised from their personal savings while they were working and also sourced additional capital from family and friends. The co-founders tell Start-UpDigest that their business has grown tremendously since starting their operation owing to global standards adopted in production and excellent customer service, as well as repeated patronage and high referral rates from their previous customers. “Despite we started the business at the height of Nigeria’s recession, which was not probably the best time to start, we have been able to survive and grow new number of clients,” the pharmacists-turned-entrepreneur says. “We have never spent anything on advertisement. Our previous customers have been the ones

doing it for us. We regularly get referrals from them,” Abioye further says. The young entrepreneurs also point out that they have not taken any loan from money deposit banks since starting. SirChef Food and Beverage currently has 26 full-time and part-time employees. “At the moment, we have 26 staff members working with us both directly and indirectly,” Ladi says. Both entrepreneurs tell StartUp-Digest that they source most of their raw materials locally and that plans are ongoing for the business to own a farm. “We source most of our raw materials locally and produce all our food products applying global standards. We only import our packaging materials overseas, but we do the printing here to create employment for Nigerians,” Ladi explains. “We have started discussing with some packaging companies in the country and very soon we

will begin to source from them,” he adds. It has not all been rosy for the two entrepreneurs as logistics weaknesses have continued to impact negatively on their business. According to the entrepreneurs, the traffic situation in Lagos has remained the major challenge confronting the business. Poor road infrastructure across the state is also another big factor. The entrepreneurs say that these have impacted their delivery time negatively. To address this, Abioye and Ladi have made huge investments in buying bikes, making use of personal cars for deliveries to customers. Also, the co-founders have decentralised their delivery channels to ensure efficiency and effectiveness in delivery. “The major challenge for our business is logistics. It was a nightmare when we started initially because we had to outsource to other vendors to help with our deliveries. “It was not a pleasant experi-

ence, so we brought out a bit of extra money to get our own bikes, and we had to use our personal vehicles as well,” Abioye says. “In some cases we had to hop out of the car, go ahead and ask the driver to come and meet us. It was absolutely crazy initially, but it was very encouraging with the support we got from family, friends and from some of our customers,” Ladi says. They urge the Federal Government to address the huge infrastructural gaps in the country, noting that it will ease the challenge of doing business in the country. They also call on the government to open up other means of transport system in the country to reduce the pressure on road infrastructure. “The government needs to provide a conducive environment for businesses to thrive, especially start-ups. In terms of power, road and rail infrastructure, there is a lot that needs to be done. We know how much we spend on power on a monthly basis,” they both say. On expansion plans, the cofounders say they plan to adopt technology to make processes seamless and grow the business. The entrepreneurs add that they adhere to corporate governance. Also, the young entrepreneurs are planning to expand their operations to other major cities across the country. On advice they are willing to offer other entrepreneurs, Ladi says, “Solving problems is not a quick fix; it is a gradual process. So be focused and be passionate about what you want to achieve. Awareness is very crucial and ensure you provide a product that has value.” For Abioye, “Be informed and willing to learn new things. Do thorough research about the sector you want to invest in and mingle with the right people. You must also learn time management if you want to succeed as an entrepreneur.”

ACUF trains youths on entrepreneurship, leadership skills

non-profit organisation, Amaka Chiwuike-Uba Foundation (ACUF), has moved to tackle some of the challenges facing youths in Nigeria by training them on entrepreneurship and leadership skills under the YouDal workshop series. In a statement, Chiwuike Uba, executive director, ACUF, enumerated some of these challenges as lack of knowledge to envision and execute strategic leadership processes and effective management, inadequate skills for entrepreneurship, lack of ability to participate in governance and effect social change, as well as weaknesses in setting personal and vocational goals.

Uba stated that the YouDaL workshop series would encourage youths to take up leadership responsibilities. “The workshop series aims to promote youth leadership development, education and employment, to support healthy lifestyle and foster the participation of all the youths into all aspects of society at national, state and local government levels. The mission is to transform lives and build nations,” Uba said. According to him, despite that youths account for more than 50 per cent of Nigeria’s population, over 60 per cent of them are unemployed and very insignificant number are in government.

He argued that contrary to the known and often used phrase - the youths are the leaders of tomorrow-, the youths are also leaders of today. He argued that youths are neither equipped to seize present opportunities in leadership nor are they prepared to take future opportunities. “It is incontrovertible that everyone has unique strengths and challenges that hinder their path of success. To confront the challenges, visioning and goal setting are required. “Goal-setting helps us to separate our strengths from our weaknesses and make realistic plans for improving our lives. It also provides

the needed focus and context to a mentor pair. “To address this problem, ACUF’s inaugural YouDAL Workshop Series scheduled to hold in Enugu, will focus on Visioning and Goal Setting,” he added. Uba noted that the training workshop methodology shall include individual exercises and reflections, stories and scenarios, small and large group discussions, activities and games, role-playing exercises and team projects and exercises. He urged the youths to key into the programme as participation to the training workshop is free of charge. “However, due to limited available space, participation to the

training workshop shall be focused only on registration.”

Start-Up Digest Team ODINAKA ANUDU Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Angel James Joel Samson Graphics

BUSINESS DAY

C002D5556

Monday 25 June 2018

Start-Up Digest Mimmi Nwosu: Changing Nigeria’s fashion landscape Stories by JOSEPHINE OKOJIE

hen it comes to fashion, Mimmi Nwosu knows it. She is the founder and chief executive officer of Mimi’s Kreationz Limited, a start-up fashion outfit that operates in Lagos. With over nine years’ experience, Mimmi is on a mission to redefine the country’s fashion industry. The quest for wearing her own made designs prompted her to establish Mimi’s Kreationz in 2013 immediately after completing the tertiary education. She has since trained over 20 persons in designs and style. Mimmi started her business with an initial capital of N30, 000 raised from personal savings. The money was used in buying her first sewing machine and other accessories. Before starting her business, Mimmi had to seek employment to raise additional capital to ex-

Mimmi Nwosu

pand and attend further trainings on fashion and designs. Afterwards, she took up a job

as a customer service agent for an e-commerce firm and continued to run her fashion business on

weekends. According to her, the e-commerce firm provided her a platform to sell her own products across the country, as she was marketing her designs alongside the company’s products to clients. Mimmi told Start-Up Digest that the hunger for success in her business made her enrol in a fashion school and for a post-graduate programme to acquire more skills and creativity. She noted that creativity was the key for a successful fashion business, stressing that the business could only be sustained when the entrepreneur did things differently. “The fashion industry in Nigeria is wide, insatiable and calling on the creative ones and those who can usher in a new fashion culture,” the economist-turnedentrepreneur said. When asked about the challenges she has been facing since starting, the economics graduate stated that it had not been all rosy as her business suffered seriously

from poor power supply, forcing her to stay up most nights to sew for her customers. According to her, poor power supply had been a burden as she would often use generators for most of her work, a situation that had continued to shoot up her production cost. She likewise said that rising cost of fabrics and accessories were major challenges she faced. Mimmi urged the government to resolve the issue around poor power supply, saying that this would help businesses to survive and drive economic growth and development. Answering questions on how she has sustained the business, she said, “I always have it at the back of my mind that customers are kings and customer satisfaction is essential. Regularly, I revisit my purpose and constantly remind myself while I started my business. I try to deliver beyond expectations; I reflect and amend certain business decisions constantly.”

NASME sensitises MSMEs on voluntary tax compliance …as VAIDS deadline approaches ...MSMEs operators urge FG to address multiple taxes to increase compliance

s the deadline for the Voluntary Asset and Income Declaration Scheme (VAIDS) approaches, the National Association of Small and Medium Enterprises (NASME) has carried out a sensitisation programme for operators of small businesses to enable them properly understand the requirements and benefits of being tax compliant. The sensitisation programme and the tax compliance clinic sponsored by OXFAM is aimed at assisting MSMEs become tax complaint before VAIDS’ June 30th deadline. “The sensitisation is to enable MSMEs that have not been able to comply with their tax filings to be tax compliant before the deadline of the Voluntary Asset and Income Declaration Scheme (VAIDS),” Eke Ubiji, executive secretary, National Association of Small and Medium Enterprises (NASME), said. “This program has two focal states: EDO and Lagos, and we are expected to get 90 MSMEs for each of the states to be tax compliant and this is the reason we are having this sensitisation for them,” Ubiji said. A clinic was also organised as part of the programme to help operators regulate their documentations for proper tax fillings. Degun Agboade, president of NASME, who was represented

by Ladi Bankole, member of the governing council representing the private sector, while acknowledging the support of members of the coalition, noted that there was a huge illiteracy gap on tax issues among MSMEs operators. “We need to increase the level of tax education for MSMEs. This will increase their participation in tax payment and compliance,” Bankole said. Igho Orienru, assistant director, Lagos State Internal Revenue Service (LIRS), who represented Ayo Subair, chairman of LIRS, urged MSMEs to comply timely by filing and reporting all required tax information to the appropriates authorities to ensure the development and growth of the economy. Orienru called on all operators of small businesses that had not been tax compliant to take advantage of the VAIDS window the Federal Government created to regularise their tax payments. “Nigeria tax revenue is inconsistent with the lifestyle and spending levels of Nigerians. Most of the profitable businesses in Nigeria have abysmal tax payment records,” he said. “We have 80.7 million registered businesses in Nigeria and only 3.4 million individuals pay taxes. Nigeria’s six per cent tax to GDP ratio is among the lowest in the world. Ghana has 16 per cent tax to GDP ratio; South Africa is

27 per cent and the average of OECD countries is 24 per cent,” he added. He highlighted the benefits of MSMEs’ tax compliance, saying that it would make government at all levels provide more social projects that would continue to aid growth and development in Nigeria. “The VAIDS was implemented to ensure an increase in tax compliance as only one in every five tax payers is tax compliant,” Orienru further said. While highlighting the challenges limiting their compliant rates, stakeholders identified multiple taxation. Nnenna Ugwu, project coordinator, Enterprise Development Centre (ED C), PanAtlantic University, Lagos, who was also a representative of OXFAM, said that to increase t h e ra t e o f t a x c o m p l i a n c e among MSMEs, governments at all levels must address issues of multiple taxation, stating it had been a major problem for operators. “Multiple taxation is a big problem for businesses and government must address it if truly it wants to increase its tax compliance rates,” Ugwu said. The operators also called for a seamless procedure in the filing of taxes with authorities and synergy between all tax administrators, instead of having to deal with them individually.

Participants at the MSMEs stakeholders’ meet-up, organized by Leapworld Limited in Lagos.

LeapWorld, UNIDO collaborate to spearhead campaign on youth entrepreneurship ...as World marks MSMEs Day June 27

eapWorld Limited in partnership with the United Nations Industrial Development Organisation (UNIDO) is spearheading an awareness campaign on youth entrepreneurship in celebration of this year’s World MSMEs Day on June 27. The United Nations’ theme for this year’s World MSMEs Day is, ‘The Youth Dimension’. Activities scheduled to mark the day by LeapWorld Limited include a free capacity building workshop for youths and operators of micro, small and medium scale enterprises in the country that are willing to attend. In a statement made available to BusinessDay, Funke Susan Medun , director at LeapWorld Limited, said “This year, on 27 June, we will be celebrating for the second time the MSMEs Day. Specially, we will be dedicating the day to the strong contribution of courageous young individuals who have distinguished themselves in building businesses that have positively affected livelihoods, living standards and the economy in general.”

“The youths are the unsung heroes of today-- saving lives by creating jobs and giving purpose to generations to come and the need to support MSMEs towards their success. “As part of our commitment to the development and growth of MSMEs in the country, LeapWorld in celebration of the UN 2018 international MSMEs day, will further advocate for massive involvement of youths in entrepreneurship,” Medun said. Various stakeholders in the country’s MSMEs space will be on ground to interact with youths and other MSMEs operators. Also, there will be a panel discussion to address constraints impeding youth involvement in entrepreneurship. Similarly, there will be a fourhour live video session to be streamed via Facebook to provide enterprise supported recommendations on how to overturn these challenges affecting MSMEs in Nigeria. Interested youths that want to attend can visit LeapWorld website for further details, the statement says.

Monday 25 June 2018

C002D5556

BUSINESS DAY

AbujaCityBusiness Comprehensive coverage of Nation’s capital

NHIS governing council raise alarm over N25bn scam OYIN AMINU, Abuja

he Governing Council of National health Insurance Service (NHIS) has accused the agency’s Executive Secretary, Usman Yusuf over N25 billion investment scandal, at a time when citizens on the National Health Insurance Scheme are lamenting over inadequacies in the scheme. The Governing Council noted that The Executive Secretary of mislead it to act against the policy directive of government, by fraudulently obtaining its approval to invest the sum in securities which he has concluded arrangements on before seeking its approval, contrary to the laws governing the scheme. Yusuf who was suspended by the Minister of Health, Isaac Adewole, in July 2017, following allegations of gross misconduct, after the panel

set up by the minister to investigate the allegations reportedly indicted him, following which the minister forwarded the report to the presidency, but was in February, without a prior knowledge of the minister, reinstated back in office. The minister of Health had earlier in August 2017 given approval to the acting Executive Secretary of the scheme, Attahiru Ibrahim, to invest “idle funds” of the agency in federal government securities. This was said to be in line with the National Health Insurance Act (Part IV, Section 11.4), which states that: “The Scheme shall invest any money not immediately required by it in Federal Government Securities or in such other securities as the Council may, with the approval of the Minister, from time to time, deter-

mine.” According to the letter of approval (HMH/ ABJ/032/X/465), dated August 18, 2017, the minister wrote: “It has come to my notice that the NHIS kept residual balance not immediately required for day-to-day operations idle in Treasury Single Account with the CBN. The Sum has accumulated over the years and has become somewhat sterilised as you continue to hold it in cash thereby leading to erosion in value due to inflationary trends which currently stands at 16.1% “Following from above and in order to arrest this value erosion of the NHIS funds, I hereby approve as follows: commence effective immediately, starting with the sum of N10 billion (sic) up to the tune of N50 billion (sic) investments in Federal Government Securities at prevailing market

determined yields. “Engage the services of any of the regulatory bodies certified investment counter parties; Cowry Asset Management Limited, Finmal Securities Limited or Elixir Investment Partners Limited to advise on the investment options and seamlessly execute same. “The investment actions and the expected returns should be captured in your 2017 budget estimates. “It is my expectation that the returns on these investments will be used to fund part or all of the proposed interventions in the tertiary health institutions without depleting NHIS actual funds balances. I have taken the liberty to notify the honourable Minister of Finance, Chairman Senate Committee on Health and Chairman House Committee on Health Services.” L-R: Nick Long, executive director, JP Morgan, Mary Uduk, acting director general, Securities and Exchange Commission (SEC), Akeem Oyewale, CEO, Stanbic IBTC and Isyaku Tilde, acting executive commissioner operations SEC during a meeting between SEC and JP Morgan in Abuja. Picture by TUNDE ADENIYI.

FG vows proactive measures against ISSI threat STELLA ENENCHE, Abuja

ederal Government has vowed to take proactive measures to protect the Nigerian territorial boundaries from external attacks. This government assurance is coming on the heels of the intelligence report that the Islamic State (ISSI) is secretly training jihadist fighters in Nigeria to launch an attack on Britain. The Minister of Interior, Abdulrahaman Dambazau while speaking at the presentation of a new curriculum for the Nigeria Immigration Service (NIS) training institutions across the country in Abuja said government will do all it takes to protect the country’s territorial integrity . “You know when information like this comes you don’t take things for granted whether true or not. It is security information. “Before now, we get pre-

pared so that everything we are suppose to do security wise is been done. Such information also raises alarm and we will double our efforts towards that so we don’t take any information for granted. “I expect that with this opportunity, immigration officials should be able to deliver the services expected of them by Nigerians .Things change from time to time and I do not expect them to be static. I expect them to go along with the changes in the society and globally. “Immigration service deals with the movement of persons in and out of the country and if you travel a lot, you will see what happens in other counties so my expectations here is that we should focus on training and that is when you actually see the motivation because most times, you will be sent on courses and those courses will determine your career procreation. So that is the motivation,” he said.

Muslim community urges FG to support ranching BENJAMIN AGESAN, Makurdi

he Muslim community in Benue State has called on the Federal Government to deepen its support for ranching of livestock especially cattle as earlier endorsed by the National Economic Council. The Islamic body made the call today at the Benue Peoples House Makurdi on the occasion of the Eidiel Fitir Sallah Homage on Governor Samuel Ortom. Leader of the delegation and state Chairman, Jama’atu Nasril Islam, JNI, who also represents the Sultan of Sokoto, His Eminence, Sa’ad Abubakar in Benue, Alhaji Garba Baba, described ranching of livestock as the only solution to farmers and herders crisis. He also called on friends

of Benue State at home and in the Diaspora to assist in canvassing support for the smooth implementation of the Open Grazing Prohibition and Ranches Establishment Law 2017 of the state. “May we call at this juncture, once more on friends of Benue at home and in the Diaspora to assist in canvassing support for the smooth implementation of the anti-open grazing law 2017. The law is meant to promote harmony and safeguard the wealth of both the herder and the farmer,” he stated. Garba continued: “Therefore, we Muslim Ummah wish to further call on the Federal Government to remain steadfast to the earlier decision taken by the National Economic Council that ranching of livestock is the only solution to farmer/ herder crisis.”

Buhari administration is transforming Nigeria - Information minister OYIN AMINU, Abuja

ai Mohammed, Minister of Information and Culture has said the Buhari Administration is steadily transforming Nigeria through innovative measures that are yielding positive results. Mohammed stated this in a keynote address he delivered at the 2018 ‘Africa Together Conference’ held recently at the University of Cambridge in the UK. The Minister listed investment in people, changing the business environ-

ment and building national infrastructure as some of the areas in which the Administration has made a great impact. He said by focusing on education and skills acquisition, the Administration is addressing the need to create opportunities for the country’s teeming youth population. “In my country, school enrolment is a challenge we face. And one of the main culprits is malnutrition. Government has stepped in: 8.2 million are being fed daily free meals in 45,000 schools. Not only does this increase atten-

dance and provide children with a – in some case only – nutritious meal a day, it enhances learning efficacy in class and boosts cognitive development over the long term,’’ Mohammed said. He further said the HomeGrown School Feeding programme has yielded other results, including the employment of over 80,000 cooks and a ready-made market for food crop farmers. The Minister said skill shortages in the labour pool are being addressed through several measures, including the four-pronged N-Power programme that is providing employment and vocational

training for graduates and others, access to loans for medium and small business as well as conditional cash transfers to the most vulnerable members of the society. He said the administration is also changing the business environment for good, focusing especially on removing the red tape that makes it cumbersome for business and stifles innovation. “Much of our programme has honed-in on business reform. Nigeria has moved up 24 places on the World Bank Ranking of Ease of Doing Business index – putting it amongst the top 10 global re-

formers, along with Zambia, Malawi and Djibouti. The two areas we have prioritised are starting a business and access to credit. “In Nigeria, registering a business used to take months. Now it takes 24-48 hours. Unwrapping the bureaucracy and streamlining processes encourage an uptick in new official enterprises. We have introduced online registration, with features such as the electronic stamping of documents. And to ensure this brings with it the maximum benefit, Micro, Small and Medium Enterprises clinics have been deployed across

a variety of states to provide regulators a contact point with informal business and budding entrepreneurs to clarify any issues,’’ Mohammed said. ‘’For instance, Nigeria earmarks 30% of its annual national budgets for capital expenditure. That means N2.7 trillion has gone towards our infrastructure in the last 2 years unprecedented in our history. Power generation has climbed to 7000MW (from just over 2500MW), to which we hope to add another 2000MW by the end of the year. We have also laid down thousands of kilometres of road,” he said.

BUSINESS DAY Harvard Business Review

Monday 25 June 2018

C002D5556

MondayMorning

In association with

Drowning in work? here’s how to ask for help could help you with that meet both of the following criteria: Having someone do it for you would provide significant relief or make you substantially more effective, and they could do it without tons of supervision or explaining.

HEIDI GRANT

ou have too much to do. You can’t do it alone. You need people to help you. Why aren’t they helping you? Here’s the uncomfortable truth: If you aren’t getting the support you need with your crushing workload, odds are it’s kind of your fault.

ASK FOR IT. VERY CLEARLY. One of the most underestimated obstacles to giving help is uncertainty. It’s up to you to take that uncertainty away by making an explicit request, being very, very specific about what it is you want and being careful to choose someone who actually can help in the way you are asking.

Try the following steps: FIGURE OUT WHAT YOU NEED First, set aside time to figure out what, specifically, would really help you. Take a moment to go through everything on your plate. Identify tasks that someone

ACCEPT WHATEVER HELP YOU ARE OFFERED There are two ways in which we all tend to be overly rigid when it comes to accepting help, both of which can be self-defeating. The first is being rigid about the type of help we are looking for. The second has to do with whom we ask. We all have a tendency to write off the people who have turned down our requests in the past. But the research on this one is very clear: People who have rejected your request for help in the past are actually more likely to help you the second time you ask. SAY THANKS

One of the most important motivators for helpers is the potential to feel effective. Studies show that when people can vividly imagine the impact their help will have — or, even better, can learn about the actual impact it had — they are more motivated to continue helping in the future. Remember, when it comes to getting the help you need, you have far better chances for success than you realize — if you’ll only ask.

(Heidi Grant is a social psychologist who researches, writes and speaks about the science of motivation.)

To regain consumers’ trust, marketers need transparent data practices KEVIN COCHRANE

he seemingly limitless digital economy has brought with it feelings of overexposure. No one likes to feel as if they’re being watched, yet with technology continuing to mature, we have found ourselves entrenched in a marketing machine that has become far too intimate for anyone’s liking. It’s a tricky situation: Consumers want personalized offers that are relevant to their past behavior and future needs. In order to execute on this level of personalization, companies must collect large amounts of data. However, consumers only want some of their data used and only in a way that they are comfortable with. So, what’s the right way

to navigate these complexities?. Organizations must start by eliminating internal processes of acquiring third-party data, using only data that they have earned through explicit customer consent. Moving forward, consumers should have full visibility into how extensively their personal data is being monetized. This is an imperative, as research shows that 79% of consumers will leave a brand if their personal data is used without their knowledge. With the EU’s General Data Protection Regulation (GDPR) officially implemented across businesses, brands have a fresh opportunity to reevaluate data practices, communicate them clearly to customers, stick to their word and come out stronger on the other side.

more likely that they will offer up at least some personal information. — PROVIDE TOOLS THAT EASILY ALLOW CUSTOMERS TO EDIT THEIR PRIVACY SETTINGS. To do this, organizations should consider implementing a digital privacy center where customers can easily understand and manage their data choices. The final step is maintaining consistency. It’s one thing for a customer to initially agree to data sharing, but another for them to feel incentivized to continue to share it. As marketers, we must understand that real people buy from real people. Consider the following best practices: — EXPLAIN THE BENEFITS. Specific benefits might include more personalized

offers, exclusive rewards, or access to a decision-making tool that makes life easier. — GIVE CUSTOMERS FULL CONTROL OVER THE TYPES

OF DATA THEY SHARE. Putting the customer in control and providing flexibility in the types of data they are able to share makes it far

We have you covered through CBN’s special intervention for speciﬁed retail invisible transactions.

Are you travelling abroad for vacation

Visit any of our designated branches nationwide for your following invisible trade transactions: School Fees Pilgrimage & Other Travel Allowances (PTA and BTA) Medical Allowances

or studying abroad?

We are here to serve you. *Terms and conditions apply

www.ﬁrstbanknigeria.com

FirstBankofNigeria

@FirstBankngr

Firstbankngr

FirstBankofNigeriaLtd

@ﬁrstbanknigeria

+FirstBankNigeria

(Kevin Cochrane is the CMO of SAP Customer Experience.)

Monday 25 June 2018

C002D5556

BUSINESS DAY

REAL SECTOR WATCH BUSINESS DAY

C002D5556

Monday 25 June 2018

Manufacturers produce goods worth N5.03trn in 6 months Stories by ODINAKA ANUDU

emb ers of the Manufacturers Association of Nigeria (MAN) produced goods valued at N5.03 trillion between July and December of 2017. This represents 0.19 percent increase from N5.02 trillion produced by members of this association in the corresponding period of 2016, latest data from MAN show. MAN has over 2000 members, and manufacturing output, capacity and investments in Nigeria are often determined by activities of its members. “The production performance of the sector in 2017 was due to the relative stability in the foreign exchange market and improvement in the general ease of doing business in the economy within the period,” the association says. Makers of textiles, wearing apparel, carpets and leather products raised production to N25.03 billion within the period, from N24.9billion recorded in the second half of 2016, representing 0.52 percent increase over the period. In fact, the total value of textiles, carpets, wearing apparel and leather produced by MAN member companies in 2017 was put at N48.21 billion compared with N43.59 billion reported in 2016, indicating a 10.6 percent rise over the 12-month period. Similarly, cement and ceramics makers produced goods valued at N88.87 billion in the second half of 2017 as against N82.44 billion recorded in the corresponding period of 2016. In 2017, the total

value of the cement and ceramics manufactured by MAN members was N169.85 billion as against N150.74 billion in 2016. This represents 12.7 percent increase over the period. Dangote Cement, a prominent member of MAN, remains the biggest cement maker in Nigeria, controlling over 70 percent of the market. Also, manufacturers of electricals and electronics, notably cable makers, produced goods worth N60.47 billion in the second half of 2017, from N52.93 billion reported

in the corresponding period of 2016, indicating a 14.2 percent rise over the period. The value of electronics and electrical products made by members of this association was N112.36 billion in 2017, compared with N100.72 billion in 2016, indicating an 11.6 percent increase over the period. Moreover, steel makers, notably makers of metals, iron rods, nails and other forms of steel, produced goods worth N207.12 billion in the second half of 2017, from N202.98 billion reported in

the second half of 2016, representing 2.03 percent increase over the period. In the whole of 2017, steel makers produced goods valued at N408.46 billion as against N337.25 billion in 2016, indicating a 21.11 percent increase over the period. The data equally show that production value in Apapa industrial zone in Lagos rose to N423.59 billion in the second half of 2017, from N252.56 billion recorded in the same period of 2016, indicating a 67.7 percent spike over

the period. In the whole of 2017, goods worth N728.24 billion were produced by industries in the zone as against N449 billion reported in 2016. Major manufacturers in Apapa are Dangote Sugar, Flour Mills of Nigeria, Honeywell and Kneipe, among others. Ikeja recorded the highest production value, with manufacturers in the zone producing goods valued at N2.47 trillion. This, however, is a 14.2 percent decline from N2.88 trillion in the corresponding period of 2016. Major manufacturers in the zone include: Vita Foam, Cadbury Nigeria, Dangote Group, Fr ieslandCampina WAMCO, Guinness Nigeria, and First Aluminium, among many others. For the first time in four years, Ogun’s production value fell, slumping to N1.51 trillion in the second half of 2017, from N1.79 trillion in the preceding period, indicating 15.6 percent decline over the period. Industries in Ogun include: May & Baker, Pharmadeko, Unilever, Tower Aluminium, Shonghai Packaging, Nestle Nigeria, Nigerian Foundries, Dangote Cement and Beloxxi Biscuits. Production in Imo/ Abia industrial zone rose to N41.35 billion in the second half of 2017, from N5.52 billion reported in the corresponding period of 2016. Though this number may look small when compared with Ogun and Lagos industrial zones, it is a highly significant jump of 649.09 percent over the period. Aba in Abia State has over 50,000 shoe, bag and trunk makers. Jacobs Wines, and Stanchemical, among others, are two of the firms in Imo State.

Nigeria must put necessary safeguards in place before signing AfCFTA—LCCI

takeholders at the recently concluded one-day forum organised by the Lagos Chamber of Commerce on the African Continental Free Trade Area (AfCFTA) want the federal government to put necessary safeguards, systems, soft and hard infrastructure in place before signing the trade treaty. They say such measures will enable the country to maximise the potential of the free trade treaty. In a communiqué signed by Muda Yusuf, director-general of the LCCI, the chamber says there must be consumers and market right of access to multiple and diversified products and services. The communiqué says that there is a need for protection against abusive and injurious parties in and outside Nigeria based on on-going capacity expansion of trade laws, adding that investment opportunities should be made clearer for Nigerian entrepreneurs. It further says that stakeholders want global best practices through standardisation of processes, products and services.

It adds that stakeholders’ major argument against the signing of AfCFTA was fear of numerous bilateral trade agreements of member countries of African Union with the rest of the world as well as Nigeria’s underdeveloped industrial and infrastructural profile. Stakeholders noted that for AfCFTA to benefit the country, existing trade focused bodies such as the Nigerian Diaspora Direct Investment Summit, National Trade Consultative Committee and the Nigerian Industrial Policy and Competitiveness Advisory Council should be bolstered , with trade and infrastructure interconnected, the communiqué states. “Stakeholders proposed that safeguards should be put in place for the Nigerian economy and on sensitive sectors on transhipment, dumping and expect surge of imports,” it reads. “Stakeholders proposed an effective framework for the enforcement of Rules of Origin. Concerns were expressed on the prevailing disconnect between regulatory agencies and policy inconsisten-

cies among countries on the continent. Participants called for policy coherence and the reinforcement of interconnectivity between agencies to protect consumers and the Nigerian economy, as well as enhance interface with among trade, investment and governance.”

It was concluded the LCCI work with the National Office on Trade Negotiation (NOTN) and take leadership in developing appropriate message on policy advocacy on consumer protection to sharpen standardisation process. The AfCFTA is easily the largest

L-R: Alexandra Herr, deputy consul general of the German Embassy; Bernhard Schlagheck, German ambassador; Knut Ulvmoen, deputy president, Lagos Chamber of Commerce and Industry (LCCI) and Muda Yusuf, director general, LCCI, during a courtesy visit of the German Ambassador to LCCI, recently in Lagos.

agreement since the World Trade Organisation in 1994. It is targeted at creating a single market for the continent’s 1.2 billion, developing a market of $3.4 trillion. The treaty will liberalise 90 percent of products made in Africa and will establish a customs union across the continent, allowing free movement of goods and persons. Many countries in Africa had signed the agreement earlier in March in Kigali, but Nigeria and South Africa opted out. South Africa, however, is concluding discussions and is expected to sign soon, according to those familiar with the country’s negotiating team. Nigeria has fewer than 180 days to sign or risk starting afresh to negotiate, a move that could hurt the economy and rub it of free trade benefits. The LCCI had earlier expressed support over the treaty. The Manufacturers Association of Nigeria (MAN) believes, like the LCCI, that it could hurt the country’s industrial sector unless certain measures are put in place to improve infrastructure and protect local firms.

Monday 25 June 2018

C002D5556

BUSINESS DAY

REAL SECTOR WATCH ‘We have a mission to nourish Nigerians with quality dairy nutrition’ Ben Langat is the managing director of FrieslandCampina WAMCO Nigeria Plc. In this interview with ODINAKA ANUDU, he speaks on the current state of Nigeria’s dairy industry, the on-going Dairy Development Programme (DDP) initiated and implemented by FrieslandCampina WAMCO, and his expectations in 2018. How would you assess Nigeria’s dairy sector? he economy is still slowly recovering hence low demand across consumer goods. This has given rise to frequent purchase and top-up neighbourhood shopping trips (on need basis), particularly for dairy. Availability and affordability remain major determining factors, given low disposable income among the population. Having said this, affordability must be matched with quality to ensure adequate nutrition. This is the balance FrieslandCampina WAMCO offers our consumers. With increasing figures of malnutrition across the country, we consistently ensure consumers have access to quality dairy nutrition in various portion packs to reach deeper into the bottom of the pyramid. What is also important is consumer understanding of the various kinds of dairy options available (full cream, filled milk, ready to drink, among others) and their nutritional content, so as to make informed decision on their nutritional needs. We have a mission to nourish Nigerians with quality dairy nutrition, hence our commitment to providing affordable dairy for families, even more importantly, offering informed knowledge on the goodness of milk to consumers across all life stages. We believe in Nigeria and we are here to stay.

Tell us about your ‘grass to glass’ story? FrieslandCampina is guided by the purpose: Nourishing by nature. This represents our resolve to continually provide better nutrition for the world, a good living for our farmers now and for generations to come. This purpose aims at solving three major global challenges, which are of high relevance to both consumers and the communities where we operate. These include: Growing world population, attracting young farmers and reducing the use of scarce natural resources. Our company wants to help feed the growing world population, ensure food and nutrition security and provide affordable dairy nutrition. We also want to ensure that our farmers earn adequate income to maintain their farms and create a positive future for themselves and their children. It is also our

wish to enhance attractiveness for young farmers, and build a more sustainable dairy supply chain from farm to consumer, thereby reducing the usage of scarce natural resources. We know that milk and dairy products hold huge potential to meet these challenges. Dairy can improve nutrition for hundreds of millions of Nigerians as part of more balanced and sustainable diets. Our grass to glass story showcases our ownership of a unique milk chain: From the grazing of grass by well caredfor cows and the skills and professionalism of dairy farmers, which form the basis for good quality milk, to the transportation from the farm to our production facilities where it is processed, to finished products— Peak or Three Crowns milk—, making it available to consumers as part of a healthy diet. Throughout this process, we take our responsibility for quality very seriously and we have developed our own integral quality system: A single approach to guarantee the safety and quality of the entire chain, from the farm right through to distribution. How exactly does milk improve human nutrition? There is a lot of natural goodness in milk. A glass of milk daily makes a very big difference to the nutrition of children, adults and the elderly. Milk and dairy foods are nutrient-dense foods supplying energy and significant amounts of protein and micronutrients. The inclusion of dairy products adds diversity to plant-based diets. FrieslandCampina is extremely knowledgeable about milk and its derivative products. We believe that our products have a higher purpose than just being delicious and nutritious. Our product development process starts with a well-founded identification of the need for nutrients based on comprehensive nutritional research into and with our consumers. Our Peak brand is extra-fortified with 28 vitamins and minerals to meet the Required Dietary Allowance. The Three Crowns range is a heart friendly portfolio and it is endorsed by the Nigerian Heart Foundation. The Peak 456 provides specialised nutrition for children four to six years old and Peak Choco, is our rich Chocolate drink. To drive the importance of dairy nutrition, these brands have designed flagship campaigns including: Pecadomo

ture, especially by providing good roads, water and power. You can’t do anything with cows without a good supply of clean water. So far, we have sank 45 solar-powered boreholes, which provide water not only for the cows but also for all the five communities where we are already succeeding with the DDP – Fashola, Maya, Saki, Iseyin and Alaga.

Ben Langat

(Peak –can-do-more) to encourage versatility in the use of milk for improved nutrition. We have the Three Crowns Fitness Challenge that communicates the importance of nutrition and exercise. Peak 456 under the Drink.Move. BeStrong campaign educates children and families on the importance of drinking milk combined with an hour of exercise. What level of success has the Dairy Programme (DDP) achieved, and do you have plans to replicate this in other states across Nigeria? To be honest, the milk currently being sourced from cows by pastoralists who walk those long distances in search of food and water is too low. It is just about a litre per cow. To raise that to commercial quantities, we should be aiming for, say, 10 litres per cow. Iseyinland in Oyo State, where we currently operate the DDP with growing success, is not too far from our factory and headquarters here in Lagos. Secondly, there is a good concentration of farmers that have lived there for many years who have traditional knowledge of herding. Our truck load of milk from there, if it leaves in the morning, gets here in four hours’ time for the milk to get to the factory fresh. We started with a milk collection centre there in 2011 and now we have five milk collection centres, and a bulking centre, which is where we pool all the milk into a truck and move it to the factory. There is still a lot of work to be done besides just milking the cow. To scale up milk volume per cow, you need the right

kind of breed. We must also acknowledge that other states have approached us to bring the DDP to them. Could you tell us the states that have approached you for DDP? We were humbled by the visit of the Governor of Kebbi State to seek support for his efforts in improving dairy in his state. We have sent our people to give technical support to the state. It is very difficult to move fresh milk from Kebbi to Lagos by road in time for processing. However, whenever sustainable fresh milk volumes are substantial enough in a particular location, FrieslandCampina WAMCO will be more than ready to start processing there. Are you satisfied with the level of support you and other big dairy companies in Nigeria are getting from government on the DDP? L e t ’s b e clea r o n t h i s : FrieslandCampina WAMCO is the only multinational doing dairy development in Nigeria and we do this in partnership with the federal government. We have had the Minister for Agriculture and Rural Development, Audu Ogbeh, honour our invitations and sometimes set out with me and my team as early as 6 o’clock in the morning from Ibadan to Fashola Community in Oyo because he wanted to see farmers milking their cows. That tells you there is a huge support and commitment from the federal government. For similar reasons, we commend also Oyo State Government. Government would also do well to improve infrastruc-

Why do you think other big players in the dairy sector are yet to follow your example? It is very simple: We are not making money from the DDP. Rather, we do it as a responsibility in line with our purpose of providing better nutrition now and for generations to come. FrieslandCampina WAMCO is here for the long run, not for short-term gains. We are committed to our mission of providing quality dairy nutrition for Nigerians, and improving the living standards for our farmers now and for generations to come. Our shareholders have invested in the DDP because we are looking at the bigger picture and there is a point where the two cross. We are continuously investing in the DDP; we believe in the future of the programme. What is the dairy model that will work best for Nigeria? We need to get some definitions clear. There are different levels of how dairy farming or cattle-rearing is done globally. It starts with the smallest and very traditional one by pastoralists who graze their few cows on any space or land that is available, migrating from place to place in search of pasture and water. In Africa, the Masai and the Fulani are mostly pastoralists. Their cows produce very little milk because they rear them for meat and sale proceeds. Smallholder dairy farmers form the second level. They are usually a family with some acres of land and they can keep cows within that location and are able to feed them with pasture generated within that land or its surrounding. The cows are confined and easier to control and manage disease as well as collect their milk. The third level is commercial farming, which is now hugely industrialised. In countries like Saudi Arabia, you would find a farm with thousands of cows in air conditioned dairies, fully mechanised using robots. Ranching is the fourth level, which is typically driven

by the size of land available and typically focused on beef rearing. Ranches are large farms that are well secluded for thousands of cows to move in there. So, smallholder farms have been the most successful dairy model so far and that is the model for FrieslandCampina WAMCO’s DDP. Every household that has some land can build a business on it with five to 10 cross bred cows. It makes it easier for us to collect milk. If you go to countries like Kenya, Zimbabwe, South Africa and Uganda, smallholder farmers are thriving. So in Oyo, our DDP is progressing from pastoralists to smallholder farms. With cross bred cows, you can get up to 10 to 15 litres of milk per cow instead of just one or two litres. How exactly have you handled technology transfer as part of your on-going DDP? We call it the Farmer2Farmer programme, where farmers from The Netherlands visit Nigeria, spend time with farmers in Oyo State, interact with them to share global best practices with them. We organised Nigeria’s first ever Dairy Farmers Day late last year. Leading to the event, two Dutch farmers spent about two weeks in the DDP communities, training local farmers on best dairy farming practices . This has yielded a lot of benefits and will be a continuous thing. Farmer2Farmer language is well understood irrespective of where they are in the world. They got very practical, demonstrated what nutritious pasture is and what it isn’t, what is hygienic for cows and what isn’t. He is a smallholder farmer and a native to his location. His farm is now bearing similarities to what you will see in a commercial farm in The Netherlands with improved hygiene and proper keeping of farm records. How will you rate government policies, especially the new policies on the ease of doing business? I can say clearly that government policies towards the ease of doing business in Nigeria are commendable, especially for new investors and this should help boost the economic climate. What also needs to be done is to strengthen the business climate to support old businesses to compete fairly and sustainably too.

BUSINESS DAY

C002D5556

Monday 25 June 2018

C002D5556

Continued from page 1

Oshiomhole inaugurated as APC...

affirmed winner by delegates at convention before voting commenced, having contested unopposed. Also, National Secretary of APC, Mai Buni who was reelected unopposed took oath office shortly before the National Chairman. In performance of his official assignment, Oshiomhole swore in other National and Zonal officials elected at the convention. These include, Emma lbediro, National Organizing Secretary, Bolaji Abdullahi, National Publicity Secretary, Adamu Fanda, National Treasurer, George Muoghalu, National Auditor, Abubakar Nai Shaya, National Youth Leader, Babatunde Ogala, National Legal Adviser, Salamatu Umar, National Woman Leader amongst others. In his acceptance Speech, Oshiomhole said he would resume work the next day (Monday) as there was no time to waste considering the task ahead. He promised to work with all stakeholders to reform, reposition and revitalized the party not only for electoral successes but to provide the change promised

Nigerians and declared that there were, “no losers as all contestants were winners,” hence called for synergy in the party. The main opposition Peoples Democratic Party (PDP) has however challenged the new National Chairman of the All Progressives Congress (APC), Adams Oshiomhole, to immediately submit himself to the Economic and Financial Crimes Commission (EFCC) over corruption allegations hanging on his neck. The party said Oshiomhole lacks the rectitude to speak in public as a leader at any level, until he clears the allegations that he diverted billions of naira meant for the people of Edo State while he was governor. PDP noted that since the petition against him at the EFCC is in the public domain, the newly elected national chairman would do the APC, Buhari Presidency, the anti-graft agency as well as himself a lot of good by quietly submitting himself for investigation and possibly, prosecution. A statement on Sunday by Kola Ologbondiyan, PDP National

Publicity Secretary, reads: “Since one of the campaign footstool upon which APC was elected into office is fighting corruption, it will be incongruous for Oshiomhole to go about his new assignment with allegation of corruption, even as tiny as a strand of hair. “It is also instructive for the new chairman to understand that Nigerians are no longer inclined to sophistry, illogical arguments, deceits, contrivance and recourse to abuse as a method of campaign. “As such, the PDP would be prepared for engagements that have the potency of rescuing our people from the hunger and starvation which the APC has sunk them. “However, the essence of Oshiomhole’s emergence as President Muhammadu Buhari’s sole candidate was not lost on Nigerians as the Presidency imposed him as a pliable instrument to frustrate other would-be presidential aspirants of APC extraction and hand the ticket to President Buhari, who, obviously is afraid to stand a presidential primary due to his failures in office”.

L-R: Olakunle Alake, director, Dangote Flour Mills plc; Halima Aliko Dangote, executive director, commercial, Dangote Flour Mills plc; Aisha Ladi Isa, company secretary/legal adviser, Dangote Flour Mills plc, and Asue Ighodalo, chairman, Dangote Flour Mills plc, during the 12th annual general meeting of Dangote Flour Mills plc in Lagos, at the weekend.

Diamond, FBNH eurobonds outperform as EM.. Continued from page 1

Bank Eurobond which matures in 2020 returned 2.28 percent in capital gains for investors this year excluding coupon payments. Behind them were Access Bank and another First Bank Eurobond which were up 2.11 percent and 1.17 percent respectively. Eurobonds issued by GTBank and Zenith bank which will mature in 2018 and 2019 respectively were the worst performing Eurobonds this year as the bonds posted negative returns of -1 percent and -2.25 percent. The worst performer was a Zenith Eurobond which matures in 2022. The bond was down -5.23 percent year-to-date. This mixed performance in eurobonds is a dramatic turnaround compared to the second half of the last year where 6 out of the 8 eurobonds in the market generated positive returns for investors. Last week marked the fourth time in the space of 12 months that the Federal Reserve Bank of America has raised interest rate. The benchmark interest rate in America is up from 1 percent last June to 2 percent today. “This 100 percent change in rates is pressuring EM currencies as foreign investors sell off corporate

bonds in risky emerging economies,” said Henry Ogbuaku, group head, Asset Management at GDL Asset Management. Nigerian corporate eurobonds however have performed decently through this period as investor confidence appears to be stronger as the economic recovery translated into stronger financial performance by local banks. Full year 2017 reports of Nigerian banks showed that most banks earned record profits during the year. This bottom-line growth helped to push eurobonds issued by first bank, UBA and Zenith Bank up 7.26 percent, 7.55 percent and 5.73 percent in the second half of the year 2017. Wale Okurinboye, head of research at Sigma Pension told BusinessDay by phone that after the selloff in Nigerian eurobonds during the economic recession in 2016, bargain investors began purchasing these cheaper bonds in 2017 which caused the eurobond prices to rally. The eurobonds of First Bank and Diamond were late to the party and investors are finally picking up these bonds which were trading at big discounts thus explaining their late price rally. OKurinboye added that the rally in Eurobonds of First Bank could be attributed to improving fundamentals in the Bank.

Ogbuaku of GDL also said that the decline in the non-performing loans of First Bank over the past year could have boosted investors’ confidence in the bank. Diamond Bank which provides one of the highest yields in the eurobond space at 8.16 percent also captured investors’ attention as the bond nears maturity next year. Also with “GTBank eurobonds currently trading above N100, investors know that the bonds will be redeemed this August at N100 so anybody holding it right now will be looking to sell which explains the downward pressure in the eurobonds this year,” Okurinboye added. A eurobond is a debt raised by an institution or government which is denominated in a currency other than the home currency of the country or market in which it is issued. These bonds are frequently grouped together by the currency in which they are denominated, such as eurodollar or euroyen bonds. Issuance is usually handled by an international syndicate of financial institutions on behalf of the borrower, one of which may underwrite the bond, thus guaranteeing purchase of the entire issue. Continues on wwwbusinessday online

41 NEWS

BUSINESS DAY

Nigeria’s rising debt fails to boost... Continued from page 1

resorted to issuing debt in a bid to boost economic growth after the economy slid into its first recession in more than two decades in 2016. But while sovereign debts have kept rising, growth has remained elusive. The country was only able to record a growth rate of 1.95 percent in the first quarter of 2018, after growing at less than one percent in 2017. Latest data from the DMO shows that Nigeria’s debt stock grew by almost a trillion naira over the three-month period through March 2018 and if that is maintained, it could swell by an extra N4 trillion by year-end 2018, taking total debt to GDP to 24 percent from 13 percent in 2016. The debt trend doesn’t suggest a crisis at first glance as the ratio is relatively low, after all, the United States- arguably the largest economy in the world has debt to GDP of over 100 percent. But the worry in Nigeria’s case, is that much of that spending is going to fund consumption, while badly needed infrastructure spending is taking the back seat. “You borrow to fund infrastructural projects, but in Nigeria’s case, debt is used to fund consumption, like subsidizing petroleum products,” Bismarck Rewane, an economist and CEO of advisory firm, Financial Derivatives Company said from the commercial capital, Lagos. Despite jacking up capital expenditure in the 2016 and 2017 budgets to 30 percent of total expenditure, actual spending has been about half of the target, while recurrent expenditure was consistently overshot. In 2017, actual capital spending came to N1.54 trillion as against the budgeted N2.17 trillion, representing just 20 percent of total expenditure. In 2016, N1.8 trillion was allocated in the budget, but only N1.2 trillion was spent, which was about 18 percent of total expenditure. “Underperforming revenue targets, caused by lower than planned oil and non-oil revenues, disrupted spending plans and capital expenditure had to bear the brunt,” a government source said on condition of anonymity. “It was difficult to channel borrowings into capital projects, as recurrent expenditure is less flexible and constitute payments that must be made,” the source said. Some N2.86 trillion was budgeted for capital expenditure (capex) in this year’s N9 trillion budget and analysts say that another underimplementation is on the cards regarding achieving that target amid the upcoming elections and over ambitious revenue targets. On the other hand, the budget for recurrent expenditure was

N2.64 trillion in 2016, but the government spent 47 percent more, chalking up N3.88 trillion at the end of the day. “Fragile economic growth is at loggerheads with the government’s Keynesian motivated plan to stimulate economic activity by boosting spending, after growth contracted for the first time in 25 years in 2016,” one business leader said. T h e e c o n o m y m a y h av e snapped five quarters of negative growth and is gradually expanding again, however that is down to the recovery in the oil sector. In GDP per capital terms, the economic contraction is far from over. The government’s response to a contracting economy was to adopt an expansionary budget, jacking up the 2016 budget - a N6.06 trillion outlay- to the highest in naira terms. The 2017 and 2018 budgets have followed suit, but some argue that the impact has failed to live up to expectations. There are two ways of stimulating a receding economy in John Keynes style depending on a country’s level of development, according to Johnson Chukwu, Group managing director and CEO of Financial advisory firm, Cowry Assets. During the Great Depression of 1929-33, the United States stimulated growth by investing in infrastructure from highways to power, in the more recent recession of 2007, growth was stimulated through a combination of recurrent spending via cash handouts to vulnerable families, tax cuts and fiscal stimulus. “For Nigeria, government spending should be targeted at capital projects, rather than recurrent, given the country’s level of development,” Chukwu said by phone. Nigeria’s infrastructure deficit- which will require up to N25 trillion ($80 billion) over 5 years according to some independent estimates- is a nightmare for businesses. For instance, the country’s installed power capacity of 7,000 megawatts is less than a quarter of the required capacity to meet the needs of some 180 million people and is only 17.5 percent of South Africa’s 40,000mw- which it generates for its 55 million people. Not only has a penchant for subsidies by the government, on electricity and petrol, hindered the inflow of private capital, it has put a massive drain on public revenues. “Nigeria needs to increase its investment to GDP ratio, which is 15 percent of GDP or less,” Charles Robertson, chief economist at Moscow-based investment bank, Renaissance Capital, said in an emailed response to Business Day. Continues on wwwbusinessday online

42 BUSINESS DAY NEWS

C002D5556

Monday 25 June 2018

Edo communities threaten legal action against ERA/FoEN over attacks on Okomu Oil … issue 7-day ultimatum to retract allegations IDRIS UMAR MOMOH, Benin

L-R Efe Omoregbe, artiste manager; Innocent Idibia, lead brand ambassador, Campari, a.k.a. 2Baba; Nkechi Nwachukwu, marketing manager, Brian Munro Limited, and Rilwan Shofunde, brand manager, Campari, at the Campari ‘Make It Red’ launch held recently in Lagos.

Presidency, BPE wade into NERC, Ibadan Disco controversy OLUSOLA BELLO

residency and the Bureau of Public Enterprise (BPE) have intervened in the problems between the Nigerian Electricity Regulatory Commission (NERC) and the Ibadan Electricity Distribution Company (IBEDC), whose management was suspended over N5 billion debt. A source close to both parties told BusinessDay that a complaint has already been made to Vice President Yemi Osinbabjo, who is the chairman of the National Council on Privatisation who it was learnt had directed the board and management of IBEDC to write a letter to the council to look into the matter. In the case of the BPE, it was learnt that it had already written a letter of objection on the NERC move. “The BPE is totally against the action of NERC, as it has said it had no right to suspend a board in which the Federal Government is on,” the source said. When BusinessDay con-

tacted the spokesperson for BPE, Amina Tukur Othman, she said she had just resumed from leave and needed to be given up till today (Monday) before she could find out what was actually happening. The source further stated that a meeting was to be scheduled for the first week of July between NERC and Ibadan Disco. Chairman of NERC, according to the source, is said to have told the Ibadan Disco members that challenged the commission to schedule for a meeting between the two parties. He said what the commission was pursing was a dead case full disclosure to be made to both NERC and BPE long time ago. “On the 14 of June 2018, our bank was directed to pay the money in question while NERC decide to slam suspension on the company on the 19,” he said, saying there was no fraud committed. The IBEDC had reacted to the suspension, describing it as injudicious and unwarranted, as the action was at variance with the understanding that was

reached with the BPE. The BPE was the agency that sold the company on behalf of the Federal Government. “The Board of the IBEDC received with shock and disbelief the decision of the NERC to suspend all executive and nonexecutive directors of IBEDC in its order of NERC/181/2018 dated 19th June 2018,” the company stated. The two parties, according a statement signed by Seye Alayande, the company secretary, reached an understanding that the repayment of the N5.7 billion plus interests would be made from the refund of the sum due from the Federal Government on the stalled Yola Electricity Distribution Company transaction. This position was to the knowledge of the BPE. The company secretary stated that the understanding from BPE, which was conveyed to NERC, was that the refund, which had been due to IBEDC as far back as 2015, could only be made after the 2018 Appropriation Bill is signed into Law.

Lack of finance, others hamper MSMEs growth in Nigeria - Enelamah GODFREY OFURUM, Aba

kechukwu Enelamah, minister of industry, trade and investment, has expressed the willingness of his ministry to collaborate with the private sector to develop the micro, small and medium enterprises (MSMEs) sector, which he notes is critical to the development of the economy. He however observed that the capacity of MSMEs to perform its role as the engine of growth of the economy was hampered by challenges such as lack of access to finance, modern technology, and market with unfair competition to imported goods, among others. The minister made this declaration at the national stakeholders workshop on review of MSME policy held in Aba, the commercial hub of Abia State, recently. He reiterated the critical role MSMEs play in the economic growth and development of many economies, and assured stakeholders of government’s

readiness to support the sector. Emelama, who was represented at the forum by Francis Alaneme, deputy director, Industrial Development Department, Federal Ministry of Industry, Trade and Investment, explained that government was realistically addressing the indentified problems through the implementations of policies and programmes targeted at the MSMEs. According to the minister, the kind of MSME activities that drive economic growth go beyond a cool idea or an improvement on old practice or product, stressing that review of the current national policy on MSME, which has been in operation for the past five years, is to meet current realities in the national economy. Towards this end, the ministry scheduled stakeholders’ engagement in the six geo-political zones of the country to harness input into the revised policy. The outcome of the workshop will be presented at the national validation workshop to be held thereafter.

Areas of reforms for the development of MSMEs in Nigeria, proposed by the National Council on MSME, are easy access to finance, improving regulatory environment for MSMEs, enabling business support services, improved access to markets for MSMEs and technology, research and development. This stakeholders’ workshop will work on these five traumatic areas and it is hoped that the outcome of the engagement will lead to a policy framework that will further increase the contribution of MSMEs to the country’s industrialisation. Henry Ikoh, commissioner for industry, who represented Governor Okezie Ikpeazu at the forum, stated that the present administration in the state had provided a conducive business environment for MSMEs to thrive through the provision of adequate security, massive road construction, promotion of made-in-Aba goods and the establishment of Education for Employment (E4E) skill acquisition programme.

N-Power: Edo announces pre-selection, schedules physical verification foar applicants

he Edo State government has scheduled physical verification for pre-selected applicants for N-Power Creative, N-Power Tech Hardware and N-Power Tech Software of the Federal Government’s Social InvestmentProgramme,inthestate. In a statement, the state focal person, National Social Investment Programme, Osayuwamen Aladeselu, said “The verification exercise for the pre-selected applicants would commence on Monday, June 25, and end on Friday, June 29. “The verification exercise wouldtakeplaceacrossthestateat the National Orientation Agency (NOA) offices in all Local Government Secretariats. “Pre-selected applicants are expected to go to the venue of the verification with originals and photocopies of the following documents: certificate of birth/affidavit, proof of place of residence, academic certificates (minimum of Senior Secondary Certificate Examination), valid Identity Card and passports.” She stressed that the pre-selection of the applicants does not translate to final selection. Meanwhile,theCommissioner for Minerals, Oil and Gas, Hon. Joseph Ugheoke, has warned members of the public over the activities of persons who disguise as representatives of the Nigerian National Petroleum Corporation (NNPC) and the Independent Petroleum Marketers Association of Nigeria (IPMAN) taskforce in the state. Ugheoke said the State Government was aware of the illegal activities of the group of persons, adding, “these persons move about from one fuel station to another harassing, intimidating and exploiting marketers and petroleum tankers along the high way under the guise that they are representatives of the NNPC and IPMAN task force.” He urged members of the public to report the activities of the groups to the nearest police station and to the State Ministry of Minerals, Oil and Gas, in Benin City, for immediate action. Ugheoke said all relevant security agencies are on alert and would not hesitate in arresting persons or group of persons carrying out the illegal activities.

he agitations by environmental rights groups, Environmental Rights Action/Friends of the Earth (ERA/FOEN), and some persons against the management of Okomu Oil Palm plc have taken a new turn as host communities dissociated themselves from the agitations. Recalled that ERA/FoEN and some persons from the host communities accused the multinational palm firm of land grabbing, parading fake Roundtable on Sustainable Palm Oil (RSPO) certification, intimidation and harassment of the communities with security operatives, especially army. In a press conference on last week Thursday, the representatives of the host communities described the allegations as false and deliberate attempt to smear the corporate and good image of the company. Robinson Oroupa, community liaison officer, Okomu extension two, gave the environmental rights groups seven days ultimatum to retract the allegations made against the oil palm company. According to Oroupa, “we the undersigned neighbouring host

communities of all Okomu Oil Palm Company Plc plantations at the behest of the respective heads of our communities and having been duly mandated by our respective Chiefs, Odionweres and elders to speak on behalf of our communities now respond to the unfounded allegations directed against Okomu Oil Palm Plc by one Dr. Godwin Uyi-Ojo, the executive director of ERA/FOEN and some individuals purporting to be representing our respective communities. “We, the undersigned neighbouring/host communities of Okomu Oil Palm Company plc, located in three local government areas of Edo State, namely Ovia South-West, Ovia NorthEast, Uhunmwode, have for the second time, risen against ERA/ FoEN, an NGO who claims to be the mouthpiece of all of our respective communities, especially if one reads the BusinessDay of the 8th June, 2018, and who has propagated misinformation in this regard by misrepresenting our community’s names in its myopic and lonesome campaign to try to drum up so-called support against the Okomu Oil Palm Company without any prior permission from our traditional leaders and seemingly solely to satisfy its own selfish ends.”

Pressure for return of UK investors to Niger Delta: Britain gives tough conditions … clean up of environment, reduction of violence IGNATIUS CHUKWU

ritain has given what looks like two tough conditions that must be met before United Kingdom investors would be encouraged to return to the Niger Delta. The conditions were tabled by the High Commissioner, Paul Arkwright, who visited Port Harcourt, the Rivers State capital, for the premiering of a documentary on the challenges and opportunities in the Niger Delta. The conditions given by Britain seem close to what the US Consul-General earlier handed down to the Rivers State government in April 2018. This seems to indicate that Europe and America could be working together on the matter of return of multinationals to Port Harcourt. The US has hinged its return to what it called curbing electoral violence. The US ConsulGeneral, E-John Bray had told the Rivers State government to post a violence-free 2019 election image before the request to set up a Business Liaison Office in Port Harcourt would be considered. Speaking on a panel of five persons this time around in Port Harcourt, the British High Commissioner made it clear that until the environment was cleaned up and violence reduced or stopped, UK companies would not bow to the pressure for their return to Port Harcourt and the Niger Delta. Pressed further by business owners from the region at the event, Arkwright said the abduction of five British citizens in the Niger Delta in recent past and the shooting of one of the victims in the presence of the others sent shockwaves back to the UK through media reports. He said the scenario created huge negative impressions in the UK leading to the travel ban and resolve of the private sector

to shun Nigeria’s oil region. As more pressure mounted from the audience, the High Commissioner who said he would be returning to the UK in the next four months said the perception the British people have about the oil region was negative. This was with the picture of violence and militancy laced with environmental pollution. He said even if the facts were different, the perception must change first. “If you keep having these things (pollution, pipeline breaking, kidnapping, violence) investors won’t come,” he said. The participants at the Banquet Hall of the Hotel Presidential made up mostly of business owners from the Port Harcourt Chamber of Commerce led by Emi Membre-Otaji, and the Rivers Entrepreneurs and Investors Forum led by Ibifri Bobmanuel tried to make a positive case for the oil region. Membre-Otaji reminded the UK that even in Iraq and Libya, oil executives from the oil majors still lived and did business there. Other contributors said youth restiveness was not there in the first place but that it was caused by years of neglect by both the government and oil majors. The participants seemed worried by the tough conditions, probably aware that it was not going to be easy to clean up the Niger Delta environment and stop violence. The Ogoni clean up alone is expected to gulp $1Bn and it has taken eight years to prepare the grounds to start an exercise that is estimated to last for 30 years. Yet, more pipes are being broken to spill more crude into the creeks. Heating of crude oil to extract petroleum is adding to soot in the atmosphere. The clean up of the entire Niger Delta is estimated in some quarters to $100 billion.

Monday 25 June 2018

C002D5556

BUSINESS DAY

NEWS Customs re-affirms inter-agency collaboration by releasing substandard gas to SON HARRISON EDEH, Abuja

igeria Customs Service (NCS) has reaffirmed its collaboration with Standards Organisation of Nigeria (SON) by releasing an impounded 40-feet container of suspected substandard LPG gas cylinders into the custody of SON. The gesture, SON said in a statement, is to enable further necessary action, which has been conducted in a brief ceremony at the Federal Operations Unit (FOU) Zone A office of the NCS in Ikeja, Lagos. SON pointed out in a statement issued that it was not the first time NCS is releasing such suspicious containers to SON that fall under their purview for further investigations. The statement said the gesture is in line with government’s policy of inter-agency collaboration in the ease of doing business and protecting the interest of Nigerian consumers. According to the Customs official, the suspicious container had violated customs procedure by trying to short change the Federal Government through false declaration and in the process SON indicated its interest in the contents of the container and in good faith the NCS decided to honour request to carry out further investigation on the LPG Gas cylinders. Speaking on behalf of the director-general of SON at the ceremony, the chief state prosecutor for SON, Babatunde Alajogun, thanked the NCS for its collaborative effort in releasing the suspicious container of LPG gas cylinders to SON, stating that SON had indicated interest in the contents of the container through a letter to the Customs as it contained goods classified as life danger products of which the NCS promptly obliged to SON’s request. The 40-feet container of

substandard LPG gas cylinders according to the Chief Prosecutor will be subjected to tests and analysis before a conclusion is arrived at as to the quality of the contents of the container and the next line of action. In his remarks during an interview with the press at the Amuwo-Odofin, Festac warehouse facility of SON to receive the container, the Director ICD, Bede Obayi further revealed that the importer of the seized container of the suspected substandard LPG gas cylinders CramoHill Nigeria Limited after initial surveillance and investigation has revealed that the address provided on the import documents turned out to be fictitious and non- existent. Obayi therefore admonished importers to adhere to laid down procedure for the importation of LPG gas cylinders as according to him “substandard LPG gas cylinders are time bombs that can kill innocent Nigerians if not stopped from coming into the country and that is why SON will not stop at anything but putting an end to the importation of substandard cylinders.” He also cautioned the Nigerian public not to patronise what is referred to as “fairly used” LPG cylinders as they are risky and could cause untold harm and possible death as they are mostly expired and not fit for re-use. And if they must purchase cylinders for use they should look out for the valve, the collar around the head of the cylinder, which is to help in the carrying of the cylinder and also protect the valve from breakage if it accidentally falls. Other attributes the director ICD advised Nigerians to watch out for include the date of manufacture, capacity of the cylinder and most importantly the SON logo and the unique serial/identification number displayed on the cylinder to ensure traceability in the case of any eventuality.

FAAC: FG, states, LG share N701.02bn in May 2018 CYNTHIA EGBOBOH, Abuja

he Federation Acc ou nt A l l o cat i o n Committee (FAAC) disbursed the sum of N701.02 billion to the three tiers of government in May 2018, from the revenue generated in April 2018. According to the National Bureau of Statistics (NBS) on Friday, the amount disbursed comprised of N612.64bn from the Statutory Account, N87.97bn from Valued Added Tax (VAT) and N418.88m being excess bank charges recovered. From the total amount disbursed, Federal Government received a total of N289.04bn, states received N181.96bn and local governments received N137.33bn, and the sum of N49.76bn was shared

among the oil producing states as 13 percent derivation fund. Revenue generating agencies such as Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS) and Department of Petroleum Resources (DPR) received N4.61bn, N8.67bn and N4.06bn, respectively, as cost of revenue collections. Further breakdown of revenue allocation distribution to the Federal Government of Nigeria revealed that the sum of N247.12bn was disbursed to the FGN consolidated revenue account; N5.25bn shared as share of derivation and ecology; N2.62bn as stabilization fund; N8.82bn for the development of natural resources; and N6.05bn to the Federal Capital Territory (FCT) Abuja.

Aviation experts call for review of charges, open skies in ECOWAS region OBINNA EMELIKE

oncerned with the rate at which domestic airlines and their supporting businesses are collapsing across the Economic Community of West African States (ECOWAS), aviation stakeholders across the region have called for the review of aviation charges and implementation of open skies across the sub-region. The stakeholders, who made the call at the ongoing Accra Weizo, a travel expo in Accra, Ghana, noted that the region paid the highest aviation charges across Africa amid unnecessary protections and competitions that had resulted in high fares and dominance of foreign airlines in the region. They decried that, while flights between Lagos and London on an aircraft with big passenger capacity attracted $70 landing charge, a 45-minute flight from Lagos to Accra

attracted same amount despite the short distance and low passenger capacity. According to Alex Nwuba, managing director, Smile Aviation, flights between Lagos and Accra or Banjul and Lome are from $200 while same distance is below $100 in other parts of Africa. To reduce the charges, he noted that governments across the ECOWAS region could start the implementation of the open skies policies that would remove barriers, encourage more investments in the sector, make the business more competitive and reduce air fares. Considering the over 300 million population of the ECOWAS region, Richard Kyereh, managing director, African World Airlines (AWA), Ghana, noted that despite the over 40 airports across ECOWAS, majority of her population travel by road, offering huge business opportunity for domestic airlines if the air fares were

comparatively cheaper. “AWA has 49 frequencies a week to Nigeria because it saw the huge opportunity in the Lagos-Accra route and offered competitive fares, which wooed many to fly us,” Kyereh, who decried the $150 charges AWA pays on the Accra-Freetown route, said. On his own part, Ado Sanusi, managing director of Aero Contractors Airlines, noted that beyond the review of charges, airlines should adopt sustainable business plan in order to outlive the 10 years mark, which most airlines in ECOWAS region hardly survive. He noted that governments across the region should see aviation as catalyst for economic growth and hence fine-tune their policies to reflect that, harmonised the charges across the region and protect domestic airlines because if aviation suffocates, tourism and other businesses that depend on it would suffer.

In a situation government refuses to review the charges, Chike Ogeah, vice president, SAHCOL, an aviation handling company, suggested that airlines in West Africa should run aircraft that match the route in order to save cost, separate ownership from the management of the airlines, and do away with foreign business and operation models that have not worked in the region. Speaking on the issue, Ikechi Uko, publisher of African Quarterly Magazine, organiser of the travel expo, noted that Africa needed no border and for seamless travel within Africa to thrive, the continent needed more well-managed and profitable domestic airlines. He therefore called on government to give priority to domestic airlines, especially with incentives that would encourage healthy rivalry among them, reduce fares and improve on passengers’ service.

L-R: Hadiza Ambursa, executive director, commercial banking (North), Access Bank plc; Herbert Wigwe, GMD/CEO; Manuel Rossini, UNICEF representative, and Abba Mamman Tor Habib, non-executive director, Access Bank, during the presentation of cheque by the bank to support UNICEF projects for vulnerable children in Northern Nigeria at the Access Bank Fifth Chukker UNICEF Charity Shield Polo tournament held at the Fifth Chukker Polo and Country Club in Kaduna at the weekend.

NDDC cries out over planned propaganda attacks IGNATIUS CHUKWU

iger Delta Development Commission (NDDC) has cried out over what it terms planned attacks on the image and reputation of the Commission and its chief executives. In a statement in Port Harcourt on Thursday, the media unit headed by a director, Ibitoye Abosede, said one particular state government had just procured a team of experts and non-governmental organisations (NGOs) to create false photographs and messages to attack the Commission. The present managing director of the NDDC is from Akwa Ibom and he was deputy governor there, and was rumoured to want to contest for governorship in 2019. The managing director, Ekere Nsima, is yet to confirm any such interest. He said the attacks were also aimed at the Federal Govern-

ment and the ruling APC. “Just yesterday, a photoshopped image of a road project, which had been circulating online for months, was fraudulently and falsely represented as an NDDC project, in a bid to create the impression that the Commission’s road projects are executed without recourse to basic project standards,” he said. The statement said the Commission had been reliably informed that more of those mudslinging, falsehood, mischief and unwarranted and politically motivated attacks, had been planned with increased intensity in the coming days. “Since the current Governing Board and Executive Management assumed duties in November 2016, we have received the most sustained and unwarranted attacks from Akwa Ibom State. While we encourage scrutiny and objective criticism, geared towards ensuring that we offer the best service to the Niger Delta

region, these constant, vicious and virulent attacks, deliberate distortions, falsehood and open confrontation, driven by political scheming, have become distractions that the region and our people cannot afford at this time. “As the Commission has often stated, NDDC, as an intervention agency, is not in competition with any of the nine state governments of the Niger Delta region. Our mandates are different, but equally important and desperately urgent. We ask that the Commission and its representatives be allowed to focus on the onerous responsibility of developing the region. We believe that there is no reason to poison the chalice, because our people drink from it.” The NDDC said the entire Niger Delta region was in dire need of rapid, even and sustainable development. “That is our core mandate. That is our primary focus. That is why we are more concerned about governance,

which impacts positively on the people, than divisive and fraudulent politicking. Through our structures, we have extended our hands of cooperation and partnership to all the nine Niger Delta states.” He said the Commission has a huge footprints in the suspected state and that it was obvious in keeping with the mandate of the current Board to ensure that the state enjoyed the largest share of NDDC projects as the leading oil producing state in Nigeria. He said the Commission had extended their hand of friendship to the state government on many occasions, as they had done with other State Governments. “Indeed, our partnership with other State Governments has yielded important projects, such as the construction of the 50-kilometre Akodo-Araromi/ Ibeju-Lekki Road, connecting Ondo and Lagos States, being funded by the Commission and Ondo State Government.”

A1 BUSINESS DAY NEWS

Monday 25 June 2018

C002D5556

Dogara tasks Oshiomhole’s team to ensure justice for both weak, strong KEHINDE AKINTOLA, Abuja

President Muhammadu Buhari (r), casting his vote during the 2018 APC National Convention in Abuja. With him is Governor Aminu Masari of Katsina State. NAN

Moody’s updates credit opinion on Sterling Bank

or its resilient deposit-based funding profile, fair local currency liquidity buffers and growing retail product suite, Moody’s Investors Service has assigned a Counterparty Risk Assessment of B2 (CR) /Not Prime (CR) to Sterling Bank plc for the month of June 2018. The upgraded rating, which also affirms the bank’s improved risk management process and IT infrastructure, is uplift from the bank’s b3 baseline credit assessment (BCA) in May. Equally, it upholds Fitch Ratings’ February 2018 update on the lender’s standalone creditworthiness, coherent strategy, business transformation initiatives, and strong management team. Moody’s based the credit rating on Sterling Bank’s resilient deposit-based funding profile and fair local currency liquidity buffers, improve-

ments to its IT infrastructure and risk management processes and a growing retail product suite as well as high probability of support in case of need. Commenting on the updated rating, Abubakar Suleiman, Chief Executive Officer, Sterling Bank, said, “We will continue to execute the plans to drive efficiency across the business under the three pillars of agility, digitisation and specialisation. “These pillars will propel us toward sustainable growth by enhancing our ability to innovate; solidify our retail funding base; strengthen our enterprise-wide risk management framework and drive excellent service delivery across all channels to enhance customer experience.” The CEO added that the bank made major investments in technology infrastructure to provide excellent services to customers, grow

markets and create new ones more efficiently and engagingly. He referenced the successful launch of Farepay, Onepay and Specta, an innovative online lending platform, which offers personal loans within five minutes as part of the bank’s digital transformation journey. Analysts at Moody’s also assigned national scale rating for Sterling Bank, noting that the bank’s national scale ratings of A2.ng/NG-1 for local currency deposits and A3.ng/ NG-2 for foreign currency deposits are generated from the bank’s global scale ratings through maps specific to each country. The analysts observed that NSRs were not intended to rank credits across multiple countries; instead they provide a measure of relative creditworthiness within a single country - Nigeria in the case of Sterling Bank. On the outlook for the bank, the report noted that,

ISIS threat: AIG deployed to head MMIA Police Command IFEOMA OKEKE

ollowing fresh terrorism threats in the country, the Federal Gove r n m e nt ha s d e p l oye d Danjuma Muhammad, an assistant inspector-general of Police, to take over affairs at the Murtala Muham m e d Inte r nati ona l Airport Police Command. Muhammad is taking over from Abdullahi Ali, a commissioner of Police, who retired recently. A commissioner hitherto headed the command and the move by the authorities to assign a superior officer might not be unconnected with t h re a t s by t h e Is l a m i c State (ISIS) to carry out attacks on the aviation sector. Joseph Alabi, spokesperson for the command,

confirmed the development to newsmen on Sunday in Lagos. Alabi said the deployment of an AIG to take over the helms of affairs at the nation’s busiest airport was aimed at improving safety and security of travellers and other airport users. Ac c o rd i n g t o A l a b i , Muhammad is an experienced officer who has served in many commands and formations before prior to his transfer to airport. He said: “The transfer of a very senior ranking officer to the airport command is very strategic and the objective is to ensure that nothing untoward occurs here. “ T h e A I G ha s s i n c e assumed duties and has warned officers attached to the command that he

will not tolerate laziness, idleness and dereliction of duties. “ He said the command head had also issued a warning touts parading themselves within the airport environment that they would be prosecuted if and when apprehended. On the threat by terrorists, he said Muhammad assured travellers and other airport users that adequate measures had been put in place for their safety and security. “The command is working with the Federal Airports Authority of Nigeria (FAAN) and other sister security agencies to ensure that our airport is safe. “Our advice is that travellers and other airport users should remain vigilant, law abiding and also comply with the new security measures at the airport environment,” he said.

“All the long-term ratings assigned to Sterling carry a stable outlook, reflecting our expectation that the bank’s pre-provision income will withstand credit costs and the bank’s credit fundamentals will remain in line with similarly rated banks.”

peaker of the House of Representatives, Yakubu Dogara, has charged the newly elected leadership of the All Progressives Congress (APC), under the leadership of Adams Oshiomhole, to ensure justice for both the weak and the strong in the party. In a remark at the end of the party’s national convention in Abuja on Sunday, Speaker Dogara noted that: “there are no challenges that defy solutions and if we search deeper we will definitely find solutions to all the challenges confronting us as a party and as a nation.” He said for the APC to make progress and deliver on its promises, there must be unity, which can only be achieved if there is justice in the party. “The issue of justice which we know that Mr President stands on and he stands for the common man, and his strength has been the common man. “It is therefore very important that the leadership of the newly elected executives create equal opportunities for the weak and the strong,” he said. Dogara maintained that without conflict there cannot be progress but it is incumbent on

leadership at all times to proffer solutions to challenges. “Charge you also to maintain the culture of democracy which is conflict, compromise, consensus and progress. Without conflict there can’t be progress “As a matter of fact it was David Hume, the greatest British philosopher who said that the truth springs from arguments among friends and of course that was an expansion of an early statement by Solon, the Athenian lawmaker who undoubtedly is one of the founders of this democracy that we practice who decreed as a crime for democratic citizens to shrink from controversy. In the Ancient Greek if you run away from controversy you are disenfranchised. “The escalation of constructive conflict is good for our progress and management of this conflict is what will lead to further progress in our party and the nation.” The speaker stated that the APC under President Muhammadu Buhari has done a lot but there is more to be done the “destiny of this great nation, because where we are going to is far superior than what we are going through.”

S/N

CUSTOMER

ITEM OF IMPORT

DATE OF FUND PURCHASE

SUNLIGHT RESOURCES LIMITED

CORN CURLS FOOD FLAVOUR X117 (25KG)

21-Jun-18

306.48

80,000.00

UNION BANK

INTERBANK SALES

20-Jun-18

305.85

100,000.00

DIAMOND BANK

INTERBANK SALES

20-Jun-18

305.85

50,000.00

UNITY BANK

INTERBANK SALES

20-Jun-18

305.85

20,000.00

HERITAGE BANK

INTERBANK SALES

20-Jun-18

305.85

10,000.00

ACCESS BANK

INTERBANK SALES

20-Jun-18

305.85

10,000.00

CITI BANK

INTERBANK SALES

20-Jun-18

305.85

20,000.00

PROVIDUS BANK

INTERBANK SALES

20-Jun-18

305.85

40,000.00

FAREAST (NEW HOME PRODUCTS INDUSTRIES LIMITED)

SCANFROST BRAND MICROWAVE OVEN

21-Jun-18

305.85

66,016.05

FAREAST (NEW HOME PRODUCTS INDUSTRIES LIMITED)

SCANFROST BRAND FREEZERS IN CKD FORMAT

21-Jun-18

305.85

48,364.00

FAREAST (NEW HOME PRODUCTS INDUSTRIES LIMITED)

SCANFROST BRAND AIR CONDITIONAER IN CKD FORMAT

21-Jun-18

305.85

129,619.95

SUNLIGHT RESOURCES LIMITED

CORN CURLS FOOD FLAVOUR X117 (25KG)

21-Jun-18

305.85

6,000.00

SONNEX PACKAGING (NIGERIA) LIMITED

PET RESIN

22-Jun-18

344.50

245.00

SONNEX PACKAGING (NIGERIA) LIMITED

MASTER BATCH

22-Jun-18

344.50

78.81

GMT NIGERIA LTD (INTAFACT BEVERAGES LTD)

BREWERY DUAL FUEL GENERATOR ACCESSORIES

22-Jun-18

344.50

6,105.39

MIKANO INT'L LTD.

150 UNITS OF CKD GENERATORS CONSISTING OF PERKINS ENGINE & STAMFORD ALTERNATOR

22-Jun-18

344.50

9,102.00

SUNRISE PRODUCTS LIMITED

RAW MATERIAL FOR INDUSTRY - BOPP TRANSPARENT FILM NON-PRINTED

22-Jun-18

344.50

9,465.24

SUNRISE PRODUCTS LIMITED

RAW MATERIAL FOR INDUSTRIAL ARTIFICIAL RESINS

22-Jun-18

344.50

5,006.50

CBN

WHOLESALE RETURNS

22-Jun-18

344.00

12,858.40

GMT NIGERIA LTD (INTAFACT BEVERAGES LTD)

BREWERY DUAL FUEL GENERATOR ACCESSORIES

22-Jun-18

344.50

6,429.20

DE-UNITED FOODS IND LIMITED

ALUMINIUM FOIL

22-Jun-18

344.50

23,573.74

CBN

WHOLESALE RETURNS

22-Jun-18

344.00

12,858.40

CBN

UNUTILISED LC - MF20170008124

8-Jun-17

320.00

230.00

CBN

UNUTILISED LC - MF20170019946

8-Jun-17

320.00

702.14

S/N

CUSTOMER

DATE OF FUND PURCHASE

EXCHANGE RATE

USD AMOUNT

OTHER SOURCES 1

19-Jun-18

305.85

20,000.00

OTHER SOURCES 2

21-Jun-18

306.35

20,000.00

CBN

20-Jun-18

305.35

500,000.00

CBN

22-Jun-18

344.00

42,861.34

CBN

22-Jun-18

344.00

42,861.34

TOTAL AMOUNT

625,722.68

AVERAGE AMOUNT

125,144.54

EXCHANGE RATE

USD AMOUNT

BUSINESS DAY

C002D5556

Monday 25 June 2018

C002D5556

BUSINESS DAY

A4 BUSINESS DAY NEWS Banks secured credit to households rises in Q2 HOPE MOSES-ASHIKE

eposit money b a n k s’ s e c u r e d credit to households increased in the second quarter of 2018 on the back of increased liquidity position and market share objectives. The Central Bank of Ni g e r i a ( C BN ) ha s re leased the results of the Q2 2018 survey, conducted from May 21 to 25, 2018. The results are based on lenders’ own responses to the survey, and do not necessarily reflect the CBN’s views on credit conditions. The Q2 2018 credit condition survey for households, small businesses and corporate entities indicated an increase in availability of secured and unsecured credit to households and corporates entities. Spreads on overall secured lending to household remained unchanged in Q2 2018, while they widened for secured lending to corporates. Lenders reported that demand for total unsecured lending from households increased in

the current quarter, and was expected to increase in the next quarter. Demand for corporate lending increased across all firm sizes in the review quarter. Although lenders maintained the same credit scoring criteria in Q2 2018, the proportion of loan applications approved in the quarter increased. Lenders expect to leave unchanged the credit scoring criteria in the next quarter, yet still expect an increase in the proportion of approved households’ loan applications in Q3 2018. Maximum Loan to Value (LTV) ratios remained unchanged in the curre nt q u a r t e r a n d w e re expected to also increase in the next quarter. Lenders were willing to lend at low LTV ratios (75% or less) in the current and next quarters. H o w e v e r, t h e y e x press e d w illingness to lend at high LT V (more t h a n 7 5 % ) i n t h e c u rrent and the next quarters. The average credit quality on new secured lending improved in Q2 2018 and was expected to improve in Q3 2018.

C002D5556

Monday 25 June 2018

NEITI urges FG to review obsolete ‘production sharing agreements’ to address revenue losses HARRISON EDEH, ABUJA

igeria Extractive Industries Transparency Initiative (NEITI) has called for urgent need to review the Deep Offshore and Inland Basin Production Sharing Agreement between Nigeria and oil companies. NEITI says the urgency to review the obsolete legislation without further delay is in view of the revenue losses to the federation by the use of the old agreement in computation of revenues to be shared between the government and oil companies. NEITI recalled in a statement issued on Sunday that the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1993 provides for: “a review of the terms when prices of oil crosses $20 in real term; and a review of the terms 15 years after operation of the agreement and five years subsequently.” NEITI however observes with concern that Nigeria is yet to adhere to this important provision even now that the price of oil is revolving around $70 per barrel. In an occasional paper released by NEITI, which reviewed three years of NNPC’s financial and operations reports, NEITI notes that crude oil production

under the Production Sharing Contracts (PSCs) has since overtaken production under the Joint Venture arrangements. A careful look shows that Production Sharing Contracts (PSCs) accounted for 44.8 percent of total oil production while the Joint Ventures (JVs) contributed 31.35 percent. A historical analysis of this development by NEITI shows that JV companies accounted for over 97 percent of production in 1998 while PSCs contributed only 0.50 percent. This trend continued until 2012, when PSCs accounted for 37.58 percent while JVs contributed 36.91 percent. From the publication in 2013, PSCs contributed 39.22 percent while JVs contributed 36.65 percent, 2014: PSCs; 40.10 percent and JVs 32.10 percent; 2015: PSCs 41.45 percent and JVs 31.99 percent, while in 2017 the contributions stood at PSCs 44.32 percent and 30.85 percent, respectively. The NEITI occasional paper further explains: “Other companies, comprising Nigerian Petroleum Development Company (NPDC), Alternative Financing (AF), and Independent/ Marginal Fields contributed 2.39% to total production in 1998 and by 2017 this had risen to 24.83%. “This figure clearly shows the changing structure of oil production in Nigeria, where PSCs

(which contributed a mere 0.5% to total production 20 years ago) have dramatically overtaken JVs (which contributed 97% to total production 20 years ago)”. Between 2015 and 2017 covered by NEITI’s occasional paper review of NNPC report, Nigeria produced 2.126 billion barrels of crude oil and condensate. A further review of the NNPC Report shows that: “Production was highest in 2015 with 775.6million barrels produced. Production was lowest in 2016 with 661.1million barrels produced, while production in 2017 was 690 million barrels. 2016 was a difficult year for oil production because production was shut in a number of oil terminals.” NEITI’s major concern is that now that the PSCs account for about 50% of total oil production and major source of revenues, the delay or failure to review and renew the agreement means that payment of royalty on oil production under PSCs would not be made while computation of taxes would be based on the old rates. On lifting of crude oil, the NNPC Monthly Financial and Operations Report disclosed, “international oil companies (IOCs) lifted more crude oil than the government. Total lifting of crude oil and condensates was 2.135 billion barrels. “Of this sum, IOCs and Independents lifted a total of 1.367

billion barrels, while government’s lifting by NNPC was 721.16 million barrels. This means that the operators lifted 64.01% of total crude lifting’s, while government through NNPC lifted 33.76%. “When expressed in monetary terms, total government lifting of oil amounted to $35.893 billion while the figure for IOCs and Independents was $68.591 billion.” The NNPC report further disclosed that refineries received 15.15% of total domestic crude lifting out of which 41.32% was utilised under the Direct Sale Direct Purchase (DSDP) programme of NNPC. On refineries and domestic crude utilization, the report disclosed that for the 3yrs under review, Nigeria’s refineries recorded an average capacity utilization of 12.26%. A further breakdown shows that Kaduna refinery had the lowest capacity utilisation of 9% while Warri and Port Harcourt recorded 9.73% and 15.4%, respectively. One striking feature of the NNPC financial operations report is the disclosure that the Corporation lost the sum of N547billion in its operation between 2015 and 2017. Out of this amount, the NNPC Corporate Headquarters recorded the highest revenue loss to the tune of N336.268 billion.

Monday 25 June 2018

C002D5556

BUSINESS DAY

C002D5556

Monday 25 June 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Amazon’s scale in Japan challenges rivals and regulators

Theresa May’s Brexit plan: hiding in plain sight

Page A9

Page A10

Italy disrupts ‘summit to save Merkel’ on migration Populist demands to rip up existing system add to pressure on German chancellor JIM BRUNSDEN, MEHREEN KHAN AND JAMES POLITI

taly’s new populist government demanded the EU rip up its system for dealing with migrants at a mini-summit in Brussels on Sunday that laid bare divisions in the bloc over migration policy and piled pressure on German chancellor Angela Merkel. Dubbed the “summit to save Merkel”, the chancellor was one of 16 European leaders at a hastily convened gathering in the Belgian capital ahead of a full meeting of the EU’s 28 leaders to thrash out a migration deal on Thursday. The summit was requested by Berlin as a chance for Ms Merkel to press for stronger powers for countries to send back asylum seekers already registered in another EU country — a key issue in her battle with her domestic coalition partners that threatens her tenure as chancellor. But Italian prime minister Giuseppe Conte instead called for “radical change” in the EU’s so-called Dublin principle that makes frontline countries such as Italy responsible for dealing with asylum claims and allows for registered asylum seekers that move on to another country to be sent back to the state they landed in. In an eight-point plan presented to leaders on Sunday, Mr Conte called for “severing” the link between the “safe port of disembarkation” and the “competency to examine asylum rights”. At the moment, when migrants arrive on Italian soil only Italian authorities can process their asylum application. Rome wants this to be broadened to other EU countries, a step that would in effcet end a 25-year system for handling asylum claims. “Whoever arrives in Italy, arrives in Europe,” the document said. “We must reaffirm responsibility and solidarity. Schengen is at stake,” the text said, referring to the possibility that

border-free movement across some EU countries could be threatened if no deal is reached. The summit came as more than 350 migrants were stranded in the Mediterranean Sea after being rescued by Mission Lifeline, a German charity, in the latest maritime stand-off since Italy’s new government hardened its immigration policy. Lifeline’s own vessel — carrying 239 people — was left drifting off Malta, after Italian authorities this weekend insisted it should dock there but authorities in Valletta refused. Meanwhile, the Alexander Maersk, a Danish cargo ship which had picked up 113 migrants with help from Lifeline personnel, was on Sunday outside the Sicilian harbour of Pozzallo, having been left there overnight without a chance to dock. Tension between the EU’s biggest member states has fuelled concerns the bloc will not be able to agree on an overhaul of asylum and migration rules that have been under discussion for years, with increasing signs that smaller groups of countries could strike bilateral agreements in the absence of an EU-wide solution. Mr Conte also proposed that “protection centres” for processing asylum claims should be set up in other EU countries as “hotspots” to avoid overcrowding in frontline states. France and Spain have backed a similar plan but the idea has been criticised by the Netherlands. Sunday’s mini-summit had originally been intended as a meeting of a smaller group of countries, including Germany, Italy and France, but was expanded after other governments decided to attend. Discussions between the EU28 on Thursday promise to be even more complex, as Sunday’s summit did not involve the four Visegrad countries — Poland, Slovakia, Hungary and the Czech Republic — who have resisted calls from western member states to accept refugee quotas.

Weatherford International targeted by activist investor Q hits at ‘woefully inadequate’ attempts to turn round oilfield services group LINDSAY FORTADO AND ED CROOKS

eatherford International, one of the world’s largest oilfield services groups, is being targeted by an activist investor after a decade of underperformance. Q Investments, a Texas-based hedge fund, has taken a small stake in Weatherford and urged the board to sell its assets or the entire company, before its “over-levered capital structure” destroyed “what remaining value the shareholders have left”. Weatherford was often described

as one of the “big four” international oilfield services companies, along with Schlumberger, Halliburton and Baker Hughes, but its performance has lagged far behind its peers since then. In 2008 Weatherford’s net income was about $1.4bn, close to that of Baker Hughes at $1.6bn. Today its market capitalisation is about $3.3bn, while the equity in Baker Hughes, which last year merged with the oil and gas division of General Electric, is worth about $40bn. Continues on page A8

Italian prime minister Giuseppe Conte (left) with French President Emmanuel Macron at the mini-summit on migration in Brussels © AFP

China cuts bank reserves by $100bn to cushion US tariffs Central bank eases deposit rules to free funds for heavily-indebted companies TOM MITCHELL

hina is cutting the amount of reserves the country’s banks are required to keep on deposit at the central bank, freeing up more than $100bn to help cushion a slowing economy and the impact of a potential trade war with the US. The People’s Bank of China announced in a statement on Sunday that it would reduce the reserve requirement ratio for large commercial banks by half a percentage point, giving them an additional Rmb500bn ($77bn) to deploy. Reserve cuts for smaller banks are expected to free up an additional Rmb200bn. While China’s central bank did not mention the looming trade war with the country’s largest trading partner, the cuts are scheduled to take effect on July 5. This month, US President Donald Trump announced that his administration would impose punitive tariffs on $34bn worth of Chinese industrial exports in retaliation for alleged intellectual property theft. The first round of tariffs are scheduled to take effect on

July 6, with a second round hitting another $16bn worth of Chinese exports later in the summer. The Chinese government has promised to respond in kind, penalising an equivalent value of US exports as soon as Mr Trump’s tariffs take effect. The US administration is also taking further steps to escalate a trade war with plans to restrict Chinese investment in US companies and start-ups in sectors ranging from aerospace to robotics to railways. Last week Xi Jinping, China’s president, told a group of global executives, including the heads of US companies such as Goldman Sachs and Cargill, that his country could not “turn the other cheek” in the face of such threats and would hit back. According to three people briefed on the June 21 meeting, Mr Xi also told the visiting executives that “when one door closes, another opens” — a reference to the opportunities that could open up for non-US companies if Mr Trump does not back down from his tariff threat. The PBoC, which has been spearheading a campaign against financial

risk over the past two years, emphasised that the reserve cuts would be carefully “targeted”. The campaign against financial risk is being executed by Liu He, the vice-premier who oversees the country’s financial regulators and also leads trade negotiations with the US and EU. Big banks will be required to direct the Rmb500bn in freed-up funds towards “debt-for-equity” swaps — a recently introduced programme in which banks write off debt to heavily indebted firms in return for equity stakes. While the programme has largely benefited heavily indebted state-owned industrial firms, the PBoC emphasised that the new funds should not be used to help “zombie” companies with no hope of recovery. The Rmb200bn in funds freed up for smaller banks is supposed to be used to boost funding for small and mediumsized enterprises, which have long struggled to secure credit that tends to flow to state-sector companies. Mr Liu and his aides are determined to stamp out “speculative” financial practices and make sure that liquidity instead flows into the “real economy”.

BIS warns of ‘disciplining force’ of financial markets

Italian bond ructions show governments have little space to fill void left by stimulus

CLAIRE JONES

he “disciplining force” of financial markets will leave debtladen governments with limited room to boost growth as central banks ditch their crisis-era stimulus, the head of the Bank for International Settlements has warned. Agustín Carstens, general manager of the central bankers’ bank, told the Financial Times: “Some markets are overstretched and so investors will be very jittery. There is less space for taking adventurous steps. Markets will be more volatile and more sensitive to adjustments in interest rates.” Mr Carstens also said investors had become “a disciplining force”, citing the recent rise in Italian government borrowing costs after a now-rejected plan by Rome’s new coalition govern-

ment for the European Central Bank to write off all their holdings of Italian debt — a move which the general manager said “sent all the wrong signals”. Italian borrowing costs have since fallen back to 2.68 per cent after signals from new finance minister Giovanni Tria that Rome remains committed to membership of the euro. Mr Carstens’ remarks highlight the difficulty facing economic policymakers who need to ensure growth remains on track, while taking onboard markets’ concerns about high debt levels in a world where central bank borrowing is no longer so cheap and plentiful. Central banks across advanced economies are continuing to remove the support that they have provided following the worst crisis since the Great Depression, despite mounting

threats to the global economic outlook. But there is little space for governments to fill the void even if those threats, such as a prolonged period of trade tension — and its possible escalation — materialise without triggering market turmoil. With investors having to prepare for higher rates, governments would be unable to offset a slowdown in growth through boosting their spending due to high levels of debt. The BIS said in its closely watched annual report, published on Sunday, that public debt had risen to new peacetime highs and that small, open emerging markets where businesses had borrowed heavily in US dollars were particularly exposed to higher borrowing costs in the US. There had been an “excessive reliance” on easy monetary policy to boost growth, the BIS said.

BUSINESS DAY

C002D5556

NATIONAL

Antitrust policy is ripe for a rethink We should consider regulating Big Tech like we do the banks RANA FOROOHAR

he big are getting bigger. Disney has upped its bid for 21st Century Fox, off the back of pressure from Comcast, which wants Rupert Murdoch’s crown jewels for itself. T-Mobile and Sprint are pitching the Federal Communications Commission on a merger. In the wake

of the US district court decision to allow AT&T and Time Warner to merge, the floodgates will be open to a host of new deals, many of which are desperate attempts by old-line companies to avoid having their lunches eaten by the real behemoths of today’s economy — the Silicon Valley giants. But the Faangs are under pressure, too.

Regulators and politicians on both sides of the Atlantic are calling for a crackdown on their monopoly power. In the US, the Supreme Court last week ruled that online retailers can be required by states to collect sales tax, a reaction to the advantages that many virtual companies have wielded over the bricks and mortar kind. The court also announced that it would hear a case

looking at whether Apple wields too much price control over apps. Meanwhile, the new chair of the Federal Trade Commission, Joseph Simons, has pledged “vigorous” antitrust enforcement, including hearings later this year on competition and consumer protection, the first since 1995. All of this reflects a major rethink about what constitutes monopoly power in America. The last time we had such a rethink was in 1978, when Robert Bork published The Antitrust Paradox. Bork

held that the major goal of antitrust policy should be to promote “business efficiency”,which from the 1980s onwards came to be measured in consumer prices. It was a shift that took the US away from antitrust policy predicated on the welfare of the “citizen”, and one that clearly served the laissez-faire politics of the Reagan administration. But that definition is increasingly irrelevant in an age in which the most powerful companies in the world offer products and services for “free” in exchange for personal data.

Uber begins legal bid to regain London licence

Weatherford International targeted by activist... Continued from page A7 Weatherford’s shares have continued to underperform the leading companies in the sector as crude prices have rebounded. Over the past 12 months, Halliburton’s shares have risen 10 per cent, while Schlumberger’s have risen 2 per cent. Weatherford’s have fallen by 16 per cent. Mark McCollum, a former chief financial officer of Halliburton, was appointed chief executive of Weatherford last year to turn the company round. In November he launched a “transformation programme” intended to improve operating earnings by $1bn a year, but analysts say investors have yet to be convinced that Mr McCollum can succeed. Kurt Hallead of RBC Capital Markets in a note this month described the shares as “a special situations stock”, that investors would buy only if they believed the company could achieve the $1bn improvement in earnings, generate free cash flow and reduce net debt, which stood at $7.3bn at the end of March. Brad Handler of Jefferies said: “Mark McCollum has a good track record, and is well respected in the industry. But it’s going to take a while to achieve the results he wants to see.” Q, which specialises in distressed debt as well as activism, has previously targeted companies including Jones Energy, Citadel Broadcasting, Quorum Health and Houghton Mifflin Harcourt, pushing for moves including share buybacks, board changes and a takeover. Its stake in Weatherford is just 0.02 per cent, but the fund believes that other investors are also unhappy about the company’s performance and will join its campaign for change. It has invested in a mix of equity and debt as a hedge against a possible restructuring. In a letter to Weatherford’s board, the fund criticised the efforts by Mr McCollum to turn round the company’s performance as “woefully inadequate”. Q wrote in its letter that if Mr McCollum failed to deliver his projected improvements in performance, “we believe the status quo would be unsustainable”. In that case, the fund said, it would call for “a process to explore all strategic alternatives, including a focus on selling the company through an equity transaction”. It added: “We believe the most viable path would be to sell the entire company; however, we would be open to any and all alternatives”. Weatherford declined to comment. Investors’ faith in the company took a blow at the end of last year, when it announced that a promising-looking joint venture with Schlumberger in hydraulic fracturing in the US had been abandoned. Instead Weatherford sold its operations in that business to Schlumberger for $430m.

Monday 25 June 2018

Ride-hailing app defends its culture and working practices ALIYA RAM

The US commerce secretary Wilbur Ross said that the rise in US steel prices reflected ‘profiteering’ by speculators © EPA

US tariffs pose a danger to the global economy Innovation and productivity will be casualties from a trade war

aving spent a long time hoping that it was all bluster, the world’s investors, companies and policymakers have been forced to admit that a trade war is under way. How far it escalates remains unclear, but initial responses do not suggest an easy way of defusing the conflict. The companies in the line of fire will certainly be affected. Shares in German carmakers — the auto sector is the next industry in Donald Trump’s sights — fell in unison this week after Daimler was the first major vehicles company to issue a profit warning because of tariffs. The US president’s threats against EU car exports are still in their early stages, but Daimler suffered because its US operations, which sell into China, will be hit by the retaliatory duties Beijing is imposing on American cars. No country wins in a trade war, whatever Mr Trump thinks. The bizarre comments by his commerce secretary, Wilbur Ross, that the rise in

US steel prices following the imposition of tariffs reflected “profiteering” by speculators merely underlined the economic illiteracy involved. If you restrict the supply of something, its price tends to go up. That is how tariffs are supposed to work. There is no excuse for ignorance about the potential import of what Mr Trump has done. When the US hit trading partners with its infamous Smoot-Hawley tariff in 1930, Congress spent almost no time beforehand discussing potential for retaliation. The escalation into a global tit-for-tat protectionism, though it did not cause the Great Depression, made it worse. Many years of patient work during the creation of the postwar trading order were required to undo it. These days, there should have been little doubt that the likes of China and the EU — and even Canada, despite its dependence on trade across the American border — would reciprocate Mr Trump’s tariffs. That makes those

tariffs even more reckless. If anything, the pain that countries will cause by retaliating is even more immediate than in the 1930s. Compared with earlier decades, the global integration of supply chains means that many imports are destined for use in domestic production. Cutting one’s own car manufacturers off from specialist imported components is a spectacularly stupid move. True, the estimated direct cost of even a severe trade war is less dramatic than might be feared. The Peterson Institute in Washington reckons that if Mr Trump imposed his 25 per cent tariffs on cars and car parts across the board and all trading partners retaliated, it would reduce output in the US car industry by 5 per cent and employment by 4 per cent. That would be a shock, but not a huge one. Even a full-blown trade war, with tariffs on all goods worldwide raised to 10 per cent, would reduce global GDP by less than 2 per cent.

KKR faces pension fund ire over Toys R Us collapse Pension funds reconsider relationships with group after collapse of retailer MARK VANDEVELDE

ension funds that have invested billions of dollars with KKR are reexamining their relationship with the investment group amid anger over the treatment of workers at the bankrupt retailer Toys R Us. One state investment board has suspended new capital commitments to KKR while it evaluates the group’s conduct, and another has referred an investment in KKR’s new Europe-focused fund back to its board. Several other funds have invited testimony from Toys R Us workers who lost their jobs because of the collapse. The moves reflect growing unease within the funds that bankroll private equity firms run by some of the country’s richest people. Public pension funds provide nearly one-fifth of the $3tn in assets controlled by private equity, according to data from Preqin. Toys R Us entered bankruptcy last September, buckling under $5bn of debt,

a decade after it was taken private in a leveraged buyout by KKR, Bain Capital and Vornado Realty Trust. The retailer’s 30,000 employees face joblessness, many without the severance benefits they expected, after the creditors who are now in control decided to liquidate the business in the wake of disappointing Christmas trading. Toys R Us employees last week made emotional pleas to the investment committee at the California public employees pension fund Calpers, the largest pension fund in the US. With stuffed giraffe’s ears protruding from her headband, Colleen Kleven asked officials to reconsider supporting investment firms she blames for destroying her livelihood. “When I found out that Toys R Us was going to start liquidating its operations, I freaked out,” she told the committee. “My family depends on me and this job to take care of everything.” Elsewhere, officials at the Minnesota State Board of Investment told the

Financial Times that they would commit no new capital to KKR while they investigated “testimony that raised concerns about the management of Toys R Us and its employees”. KKR said it had a long record of successful investments that benefited companies and their employees. The group’s retail investments had created nearly 40,000 US jobs and more than $5bn of value for investors in the past decade, it said in a statement. Despite 12 years of growth efforts, Toys R Us had been unable to withstand the rise of ecommerce, it added. “We are profoundly disappointed by the outcome of our investment, and we regret the impact it has had on the many hardworking employees,” as well as on investors and customers, the company said. “We feel terribly for all these employees who lost their jobs,” KKR’s Nate Taylor told an investment board in Washington state, which had committed about $10bn to the group since investing in the first KKR buyout fund in 1982.

ber will defend its right to operate in London on Monday, in the latest court case surrounding the ridehailing app’s culture and conduct under founder Travis Kalanick. Transport for London stunned commuters last September when it banned Uber after finding the company was “not fit and proper to hold a licence” to operate in the capital. The company appealed against the decision and has continued operations ahead of this week’s hearing at Westminster Magistrates Court, which is expected to last three days. London is Uber’s biggest European market, with more than 3.6m users and around 45,000 drivers. In a litany of accusations published alongside the ban last September, TfL said that Uber had misled authorities in written correspondence and failed to answer questions accurately about its model for accepting trips. The regulator also raised concerns about the app’s approach to safety and its use of software called “Greyball” to avoid scrutiny by providing authorities with a different version of the app. “Uber provided a false picture of the order in which various steps take place, when a booking is being accepted,” TfL said at the time, adding: “Uber has demonstrated a lack of corporate responsibility in relation to a number of other issues which have potential public safety implications.” Uber has denied deliberately misleading regulators or posing a safety threat. It has also said it had not used Greyball in London. The company has struck a more conciliatory stance towards regulators in recent months under its new chief executive Dara Khosrowshahi, who replaced Mr Kalanick as chief executive at the end of last summer. And in London, a series of changes have already been rolled out to placate TfL. Within weeks of his appointment, Mr Khosrowshahi flew to the UK to meet TfL’s commissioner, Mike Brown. After initially saying he was “disappointed” by London’s decision, Mr Khosrowshahi has since apologised to Londoners for past mistakes. In a bid to address safety concerns, Uber now reports violent incidents involving its drivers to the police, and has made a multimillion-pound investment in call centre staff to handle questions. It also allows riders to see drivers’ license numbers when they book trips. The company has also allowed public access to its data on traffic and travel conditions and capped the number of hours UK drivers can work before they take a break. Uber is expected to agree to an additional set of conditions about its governance and approach to regulation if it is granted another license following this week’s hearing. Uber is no stranger to legal disputes. The app is facing tougher government oversight across the EU following a decision last year from the European Court of Justice that it should be regulated like a traditional taxi company instead of a technology group.

Monday 25 June 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Amazon’s scale in Japan challenges rivals and regulators Country has become its third biggest market, forcing Rakuten to try to adapt KANA INAGAKI

wo decades ago, Jeff Bezos knew little about how the Japanese market operated when he launched Amazon in the country in 2000. But the founder of Amazon, who is a fan of Toyota’s manufacturing processes, recognised the country’s love of technology and high standards for efficiency. Those traits proved essential as Japan expanded to become the US e-commerce group’s second largest international market by revenues after Germany. Sales in the country have increased 44 per cent in the past three years to $12bn, triggering explosive growth in e-commerce. Amazon’s growing clout in the country — which has been notoriously challenging for Silicon Valley start-ups such as Uber and Airbnb — is now the subject of an investigation by Japan’s anti-monopoly watchdog. The Japan Fair Trade Commission is looking into whether the company forced suppliers to shoulder costs when it offers discounts in its online marketplace. Amazon has said it is cooperating with the authorities. “Negotiations for cost cuts with suppliers occur in other sectors like autos but in Amazon’s case, its presence and influence is just too big,” said Michiaki Tanaka, a professor at Rikkyo University, who has written a book on Amazon’s business strategy. In the wake of Amazon’s rise, Rakuten, its largest Japanese rival, which operates the country’s biggest online marketplace, has expanded aggressively into financial technology, mobile phones and home-sharing. “We are very, very different from Amazon,” Hiroshi Mikitani, Rakuten’s chief executive, said at the Mobile World Congress in February. Still, to compete better against Amazon, the company is aiming to create its own logistics and delivery network within two years. Unlike its US rival, it had left warehouse and inventory management to the retailers that use its marketplace rather than building its own proprietary systems. Amazon entered the Japanese market by selling books online but has since become the go-to-destination for basic necessities and consumer electronics. The US company held a 23 per cent share in Japan’s internet retail market compared with Rakuten’s 18.5 per cent share last year, after overtaking its Japanese rival in 2016, according to Euromonitor. Other industry data shows the two rivals in a tight race. “There is still a lot of growth potential here,” Jasper Cheung, president of Amazon Japan, said in an interview. “No matter how you look at it, it’s just a very attractive country for us.” The competition is set to intensify as Amazon, which acquired upmarket grocer Whole Foods Market for $13.7bn last year, makes a big push into fresh produce in Japan. To counter the move, Rakuten has partnered with US retail group Walmart in the delivery of online groceries.

Fresh food provides a rare channel for traditional retailers to partner with Amazon. Last year, Isetan Mitsukoshi Holdings decided to offer groceries on Prime Now, Amazon’s subscription and high-speed delivery service, to reach a new generation of consumers who tend to not shop at stores. Amazon also recently opened its largest fashion studio in Tokyo to increase sales of clothing, an area where it has yet to make a breakthrough after years of trying. Euromonitor data shows that Amazon’s share in Japan’s $11bn online retail market for shoes and apparel stood at 15.5 per cent last year, trailing Rakuten’s 23 per cent and online fashion retailer Start Today’s 19.4 per cent. The heavy investment in Japan is part of a global push to expand its position in clothes, underscored by the hiring of former Victoria’s Secret executive Christine Beauchamp as president of fashion last year. Nomura estimates apparel could be a $45bn-$85bn business for Amazon by 2020, compared with an estimated $18bn-$36bn business in 2016. The company is trying to make browsing for clothes easier on its site, including using videos to show the movement of fabric to help customers get the better sense of a material. It is also armed with a massive trove of data to improve its selection of brands and offer greater personalisation. “More people start their product search on Amazon in Japan than anywhere else,” said James Peters, the Amazon executive in charge of Japan’s fashion business. “In doing that, they’re giving us great data on what they want.” Amazon added more than 1,000 brands in 2017 alone — but not all labels want to be on the site, including Uniqlo, the popular casual clothing chain. Tadashi Yanai, chief executive of Uniqlo owner Fast Retailing, has said it does not want the US rival to get hold of its customer data. Amazon, however, is confident that the hold outs will eventually be won over. “If you truly are a consumer company that is absolutely in love with your customer, then you’re not going to care where your customer buys your products,” said Mr Peters. Former executives, however, are more forthright on why rivals such as Rakuten are unlikely to match Amazon in their warehouse and logistics capability. “There is no way rivals can compete against Amazon. They invest in the best-in-class technology with little regard for profits so that they can create a sophisticated logistics operation,” said Shinichiro Nishino, a former Amazon executive who was hired by Mr Bezos to launch the business in Japan. The Japanese market, which already had an efficient logistics network, fits well with Amazon’s strategy. It was one of the first markets in which the company launched a mobile site and introduced automation to its warehouses. In 2007, it was also the first after the US to introduce the Prime subscription service.

Rakuten chief executive Hiroshi Mikitani (left) and Amazon founder Jeff Bezos are battling for dominance of Japan’s lucrative ecommerce market © Getty / FT Montage

Kenya’s bankers warn over ‘Robin Hood’ tax Finance bill proposes excise duty on financial transactions of more than $5000 JOHN AGLIONBY

enyan bankers and fund managers have warned a proposed “Robin Hood” tax on many transactions will threaten the future of one of Africa’s most vibrant financial services sectors, its capital market and investment environment. The 2018 finance bill, published last week, includes a 0.05 per cent excise duty on “money transferred by banks, money transfer agencies and other financial service providers” in amounts of more than Ks500,000 ($4,950). The Kenya Bankers Association said the proposed tax would “have wide-ranging implications on the economy including through the interbank market and international trade and investment”. John Gachora, managing director of NIC Bank and KBA vicechairman, said that if the legislation was taken at face value it “will not auger well for the markets”. “I

would be opposed to such a tax,” he said. Kenya is the centre of the financial services sector in east Africa, with many international banks basing large operations in Nairobi. The industry is a mainstay of the economy. Einstein Kihanda, head of Kenya’s fund managers association, said he wanted to “fight” the proposal because it could “cut up to 5 per cent off many investors’ annual returns”. “As written, it affects almost everything we do across the financial services sector,” he said, highlighting the fact that many trades, particularly of bonds, often involve four transactions. “When you go to the wider economy the higher cost of transactions means traders will minimise activity, which affects liquidity and the attractiveness of the capital market,” he said. “You will end up informalising the economy at a time when the government is trying to

grow the formal economy and the capital market.” Both associations said they were consulting their members and would then raise their concerns with the government. Henry Rotich, the finance minister, described the duty when he announced it as a “Robin Hood tax” for “the government to get a fair share of revenue from these financial activities and to finance critical programmes”, particularly universal healthcare. Neither he nor senior ministry officials responded to requests for reaction to the industry’s opposition or for further clarity on the proposal. Some bankers and analysts speculated that the proposal was a quid pro quo for scrapping a previously mooted plan to increase the upper bands of both corporate tax and personal income tax from 30 per cent to 35 per cent. These would have made Kenya the highest tax jurisdiction in east Africa.

Gold miner ‘Pog the Dog’ drives some investors barking mad UK-listed Petropavlovsk which operates in Russia has become billionaires’ plaything KATE BURGESS

ome dogs bark incessantly. Toy breeds are said to be the noisiest. Gold miner Petropavlovsk, nicknamed unkindly Pog the Dog, is one small mutt, with a market capitalisation of £274m. Pet psychologists say excessively vocal dogs suffer from anxiety or senility or dislike being played with like a toy. Pog suffers from being a UK-listed company extracting gold in a province in Russia east of Mongolia and north of China that has become the plaything for Russian and Kazakh billionaires. The snapping began this year when Kenges Rakishev, tycoon and chairman of Kazakhstan’s largest lender, who owns 22 per cent of Pog, ranged himself behind attempts by two investors to oust Pog’s board. CABS Platform and Slevin, which own 9 per cent of Pog, are proposing to reinstate Pavel Maslovskiy, former chief executive and Pog’s co-founder, as well as two former directors. Next week, Pog’s shareholders must vote yes or no. That has made some investors, including Sothic Capital Management, a London-based fund owning a tenth of Pog, barking mad. The latest hullabaloo comes less than a year after the last one. Then Sothic teamed up with fellow fund

managers at M&G and DE Shaw to oust the then chairman Peter Hambro, who co-founded Pog with Mr Maslovskiy in 1994. The fund management trio were backed by Viktor Vekselberg, the Russian billionaire and Fabergé egg fancier who owned just over a fifth of Pog. They succeeded and Mr Hambro was voted out in June last year. Mr Maslovskiy quit as chief executive shortly after. And then Mr Vekselberg sold his stake to Mr Rakishev. And now Mr Rakishev is backing calls for Mr Maslovskiy’s return as chief executive. By 2012 the group had borrowed more than $1bn — as the gold price began to soften and production costs rose. The money was earmarked for building a Pox Hub that would use the extremely complex process of pressure oxidation to extract gold from tricky places deep underground. But it was as much as the board could do to contain the debt. There were refinancings and a rescue rights issue. The mines were starved of capital. Shareholders were starved of dividends and the group’s gold production nearly halved between 2013 to 2017. The company restructured its borrowings late last year. But Pog is still labouring under more than $500m of debt. Pog’s founders also agreed to stand behind the entire $340m debt of IRC,

an iron ore project of which Pog owns a third and which is chaired and managed by Hambro-Maslovskiy progeny. That raised more than a few eyebrows. This month IRC said it could not meet its payments and Pog has shelled out $29.75m as a bridging loan while it tries to renegotiate loan terms. Roman Diniskin, chief executive since April, is clear that when the refinancing is agreed, he wants shot of Pog’s stake in IRC. By then the Pox plant should be up and running — it is expected to start this year. It will have cost $400m-plus but could double production, lower costs and improve ore grade. And then Pog can start paying down its legacy debt. Who knows — Pog might even pay a dividend after that. Shareholders just need to leave Mr Diniskin to get on with his job, which, says the board, won’t happen if the old board is voted back in and Mr Maslovskiy takes executive control. And Sothic, Pog’s secondlargest investor, and DE Shaw with 8 per cent, agree. The argument would be a tad more convincing if Pog’s shares weren’t still lingering at about 8p. The company is better placed than it was. Glass Lewis and fellow voting adviser ISS point out the group has outperformed the gold index as well as other miners also hit by Russian sanctions.

A10

BUSINESS DAY

C002D5556

Monday 25 June 2018

ANALYSIS

Theresa May’s Brexit plan: hiding in plain sight Prime minister pushes for an agreement that looks like a single market for goods but not services GEORGE PARKER

t has been a satisfying two weeks for Britain’s Brexiters. Over glasses of rosé on the House of Commons terrace, Eurosceptic Conservative MPs last week toasted Theresa May for snuffing out a rebellion by her pro-EU faction and passing the law that severs Britain’s 45-year membership of the EU. “It has been a good day,” smiled a leading Tory grandee above the sound of clinking glasses. The previous week the prime minister put an even bigger smile on the faces of Eurosceptics when she proclaimed that a “Brexit dividend” would help to pay for a £20.5bn spending boost for the National Health Service, echoing the infamous promise on the side of the Leave campaign’s red bus during the 2016 referendum campaign. “Fantastic news on NHS funding — a downpayment on the cash we will soon get back from our EU payments,” tweeted Boris Johnson, foreign secretary, adding the hashtags: “#TakeBackControl #BrexitDividend”. Mrs May’s claim was all the more baffling given that her government has already accepted that Brexit will leave the public finances £15bn worse off, wiping out any savings from EU membership fees. Yet behind the public expressions of confidence, many Brexiters have a nagging fear that Mrs May is about to betray them and their beloved project. As the prime minister prepares to travel to Brussels this week for an EU summit and a Brexit reality check, some Eurosceptics fear the worst. Two years after the Brexit vote, the British cabinet is still negotiating with itself: the real talks in Brussels have barely started. Mrs May will be rapped across the knuckles by her EU colleagues for the slow progress, but when she returns to Britain she will face a much more challenging summit: a cabinet meeting at her Chequers country home in early July, where she will finally confront the question she has dodged for two years: what does she actually Mrs May’s willingness to indulge

Eurosceptics over the NHS “Brexit dividend” left some smelling a rat. “When you hear her say something like that, you have to look over your shoulder to see if a juggernaut is about to run you over,” says one well-connected Tory Brexiter. Mr Johnson, in remarks to Tory Thatcherites leaked to BuzzFeed this month, warned there was a high chance that Mrs May was about to violate her “red lines” and would try to keep Britain “locked in orbit around the EU, in the customs union and — to a large extent — in the single market”. Their suspicions are well founded. Close colleagues of Philip Hammond,

the chancellor, say he only went along with the “fiction” of the “Brexit dividend” as part of a broader pact with the prime minister that the Chequers summit would see a decisive push towards a softer form of Brexit. “That was part of the agreement,” says one minister. Mr Hammond, confronted with a stubborn deficit in spite of almost a decade of growth and near full employment, will tell cabinet colleagues at Chequers that the NHS funding boost has left his coffers empty: if they want more money for other public services, Britain’s economy will have to grow faster — and that means a smooth Brexit. The chancellor is weaponising Britain’s fiscal weakness, pointing out that the country’s slide close to the bottom of the G7 growth league since the Leave vote has left the public finances badly exposed, just at the time when health, housing, schools and defence are crying out for money. Mr Johnson knows the potency of this argument. In his taped private remarks, he took aim at Mr Hammond’s “mumbo jumbo”, adding: “The fear of short-term disruption has become so huge in people’s minds that they’ve turned into a quivering wreck.” G7 chart Mrs May’s moment of truth will come at Chequers when her two cabinet camps square up to thrash out a white paper on the UK’s plans for a future relationship with the EU. Tory Brexiters say they are confident Mrs May will stick to her promise to take Britain out of the single market and customs union and take back control of its money, laws and borders. But the ground is subtly shifting. Jacob Rees-Mogg, a leading Brexiter MP, says he and his colleagues sometimes feel like “toads being boiled in water”. The outline of Mrs May’s strategy can already be discerned: it is hidden in plain sight, but gradually becoming clearer to those who are connecting the clues contained in various speeches and policy papers. The evidence suggests Mrs May wants to keep Britain in a tight customs relationship with the EU and

something that looks suspiciously like a single market for industrial goods; services and financial services would be covered by looser agreements. Some fear this will end up with European Court of Justice rulings over the goods sector — crossing one of Mrs May’s red lines — and possible payments to the EU budget. The threat last week by Airbus to shift investment out of the UK unless a smooth Brexit is guaranteed will strengthen Mrs May’s hand. It is far from clear whether the EU would accept such a proposal, but it is certain that the Eurosceptics will not like it. Mr Johnson told his Thatcherite col-

leagues this month that Brexit would happen, but added: “The risk is that it will not be the one we want.” The most obvious sign of Mrs May’s intent is her answer to the so-called “Irish backstop” question: the legally binding and open-ended guarantee demanded by Brussels that there will be no return to a hard border on the island of Ireland. In a paper published this month, she quashed protests from her Brexit secretary, David Davis — who threatened to resign — by committing the whole UK to close ties to the EU’s customs union until or unless another solution was found to avoid checks along what was once a militarised frontier. Eurosceptics fear the “backstop” will become the “frontstop”, especially since Mrs May’s cabinet are still squabbling over two alternative customs solutions, both of which have the disadvantage of having been already scorned by Brussels. Mrs May’s allies say the Chequers summit is likely to come down in favour of a variant of the so-called “maximum facilitation” customs proposal, which would use technology and trusted trader schemes to minimise disruption at the Irish border — but not remove it altogether. “It won’t run and there isn’t a single supporter of it in the EU and they won’t ever agree it,” Sir Ivan Rogers, Britain’s former ambassador to the EU, told an FT conference this month. Pro-EU cabinet ministers give a nudge and a wink that they are prepared to sign up to a version of the “max fac” plan at Chequers because even if it did fly in Brussels, the technology and bureaucracy needed to make it work would not be ready until well into the next decade. “It does have its challenges,” smiles one Remainer minister. In the meantime, thanks to the Irish backstop, Britain would effectively be part of the EU’s customs territory, collecting tariffs for Brussels. Mrs May’s plan would keep Britain within the EU’s common external tariff, severely limiting the UK’s ability to strike independent trade deals — one of the biggest prizes of the Brexiters. Mrs May’s Irish backstop plan this month also contained clues about an equally big problem that is about to hit the Eurosceptics. While the customs proposal tackles the issue of tariffs and rules of origin at the border, the government paper said: “An approach on regulatory standards will also need to be addressed.” The prime minister is edging towards something that looks much like a single market in industrial goods, to counter the need for regulatory checks at the Irish border — or any of Britain’s ports — after Brexit. “It is a proposal under current consideration,” says Charles Grant, director of the Centre for European Reform. He wonders whether Mr Johnson and

fellow Eurosceptics might quit rather than swallow it. The clues are everywhere. Britain wants to stay part of EU regulatory agencies and this month Greg Clark, the business secretary, made a littlenoticed announcement that Britain would seek to remain part of the European standards system, rejecting suggestions from Liam Fox, the pro-Brexit trade secretary, that the UK might be better off aligning with the US. Meanwhile Mrs May, in her Mansion House speech in March, noted that as part of a “comprehensive system of mutual recognition” parliament might choose to pass identical laws in the goods field to the ones adopted by the EU. Although she insisted Britain was leaving the single market and that any mutual recognition deal would

ment of goods, services, capital and labour — is unacceptable. He also points out that nowadays goods and services are inextricably bound: car sales, for example, often come with finance packages. But Sir Ivan claims that in the trade talks which will only really start after Brexit next March, Brussels might show more flexibility if Mrs May proposed a deal focusing more on goods than services. “Candidly, it’s a bloody good deal for the other side of the table,” he says. The EU has a surplus with the UK in goods but not in services, “so they get massive continuity in trade on the goods sectors and from their perspective they screw us over on the services sector”. If Mrs May pursues this compromise at Chequers, there are already

have to be policed by an independent body, Eurosceptics fear that some of these caveats would be lost in future negotiations on trade with Brussels. Mrs May’s aides admit that coming up with a Chequers plan that bridges the yawning gulf in the Tory party and might end up being negotiable in Brussels is daunting. “The landing strip is very narrow,” admitted one. But Sir Ivan, who advised Mrs May on Brexit until being ousted in early 2017 for offering unwelcome counsel, believes one potential landing zone would see Britain push for an industrial goods customs union — accepting EU rules and ECJ jurisdiction in those areas, and financial contributions — while accepting more divergence in services, notably financial services. He says this might be sellable to Tory Brexiters if Mrs May could persuade the EU to let Britain restrict free movement of people — a big factor in the 2016 referendum — in exchange for accepting a less favourable deal for the lucrative services sector. While Mr Hammond insists Britain could secure a trade deal covering financial services, the Bank of England believes the City could flourish outside the EU’s regulatory orbit. Mr Barnier has also said that splitting up the single market and the “four freedoms” — free move-

rumblings that the Tory right will try to topple her. But mainstream Eurosceptics believe Mr Johnson and his supporters will not dare to use their “nuclear” option. “If they bring her down there will be an election and they will be deselected,” said one senior Tory MP. “I hope their principles are big enough.” The Eurosceptics are also divided in their tactics. Michael Gove, a leading pro-Brexit cabinet minister hoping to succeed Mrs May as Tory leader, tells colleagues that the priority is to make sure Brexit happens in March 2019 and that its flaws can be fixed later. “Brexit is a process not an event,” says one Gove supporter. “If you don’t like Brexit 1.0 you can always have Brexit 2.0.” Mr Johnson, on the other hand, wants to get Brexit right before Britain leaves. “The backstop will become the frontstop,” says one ally. “Boris knows how this works. Transitional arrangements become permanent.” What they can agree on is that if Brexit fails to live up to the promises they made in 2016, it will not be their fault. The “stab in the back” narrative is already being rehearsed: Mr Hammond is already being lined up as traitor-in-chief. Dominic Cummings, mastermind of the Leave campaign, says Mrs May was turning Brexit into a “train wreck”.

Monday 25 June 2018

C002D5556

BUSINESS DAY

A11

A12 BUSINESS DAY NEWS

C002D5556

Monday 25 June 2018

Oando pushes the Nigerian agenda Ambode to execute more infrastructural projects - official at 7th OPEC Int’ seminar

ollowing the 2015 crash in oil prices, considerable positive actions have been put in place to bolster the oil and gas sector. Specifically, the Organisation of Petroleum Exporting Countries (OPEC) member states agreement to freeze production between major oil producers late 2016. The deal was later extended through to December 2018, and has resulted in a steady increase in oil prices to date. This and other topical oil and gas issues were discussed at the recently concluded 7th OPEC International Seminar themed: ‘Petroleum – Cooperation for a Sustainable Future’ in Vienna, Austria. Nigeria’s indigenous oil and gas firm, Oando plc, was a gold sponsor of the event, attended by over 800 key sector players and decision makers. Oando’s group chief executive, Adewale Tinubu, led a Nigerian delegation to the event where he shared the Nigerian perspective in a panel session on the topic: ‘Global Oil Future Challenges.’ The panel moderated by CNN’s John Defterios included other IOCs and business leaders such as - Amin H. Nasser, president/CEO, Saudi Aramco; Daniel Yergin, vice chairman, IHS Markit; John Hess, CEO, Hess Corporation; Andrew Gould, for-

mer CEO, Schlumberger; Sergey Vakulenko, head, Strategy and Innovations, Gazprom Neft, and Jay R. Pryor, vice president, Business Development, Chevron. The session focused on current and future challenges specific to the oil industry in the medium to long term, including challenges related to the current global supply/demand balance and the impacts of the energy policy and technology on the future of oil supply and demand. Speaking on future global oil challenges, Tinubu said: “Without a doubt there’s been a lot of market disruption. However, the good thing is that OPEC has focused on balancing the market as opposed to pricing; because price is a variable that no one can confidently say where it will end up. “The world is likely to experience larger oil deficits than expected if US barrels do not increase and the demand out of Asia and Africa continues to rise.” Speaking on the impact of investment on global supply, Amin H. Nasser, said: “In the rest of the world there has been a big drop in investment, which will impact future supply. Now we see the trend picking up a little bit, as shown by the chart, but I don’t think this is enough to meet future global supply.” Also present at the event was Nigeria’s minister of state for petroleum, Emmanuel Ibe Ka-

chikwu. He led a panel on ‘Energy Cooperation’ in the company of other industry regulators and leaders from India, Iran and Abu Dhabi. “Cooperation and sustainability for us in Nigeria is about humanity. Humanity must come to play in the decisions we make, and for us in developing countries, we need to ensure that those who host assets in their communities are better taken care of. “While we are focused on the short term challenges within the oil and gas industry, we must fight against the long term challenges in developing countries such as the fact that our asset hosts are living way below the poverty line. “As OPEC is being persuaded to shift pricing, it should take into consideration the economic development of developing countries who depend heavily on oil as a primary resource,” Kachikwu said. Speaking on the prospect for investors in Africa, Tinubu said: “Africa offers a fantastic resource base, an untapped resource base, where the production to reserve ratio is very low. With increased investment, particularly with National Oil Companies (NOC) stepping forward to realise the position they play in driving production, the likes of NNPC can raise substantial sums in the international market and convert some of these reserves into production.”

JOSHUA BASSEY

agos State governor, Akinwunmi Ambode, is poised to execute more impacting infrastructure, AbdulLateef AbdulHakeem, the state commissioner for home affairs, says. AbdulHakeem stated this while speaking with newsmen at the weekend, noting that the state government was determined more than ever before to change the state’s landscape. The commissioner, who described Ambode as a thorough administrator, said despite the current economic challenges in the country, Lagos would “continue to witness more development projects because the state is in capable and competent hands.” AbdulHakeem making reference to the ongoing Oshodi Transport Interchange as a reflection of the current administration’s resolve to bring about the turnaround development in the state’s transportation sector in line with what obtains in other developed nations, said Ambode had purposefully addressed all the challenges that his administration inherited when he assumed office three years ago. According to AbdulHa-

keem, challenges such as traffic congestion, kidnapping, cultism and other crimes that were hitherto prevalent in the state had been tackled, and workers are paid at 23rd of every month while retirees get their dues promptly. Noting that Governor Ambode remains committed to fulfilling all his electoral promises, he said the determination of the current administration to run an all-inclusive government where all residents, regardless of their tribe, religion, age and sex, would be positively impacted remained sacrosanct. He added that under Ambode, Lagosians don’t have to know somebody in government before they feel the impact of the state administration. “Although Lagos State is not a stranger to progressive leadership, especially since the defining era of Bola Ahmed Tinubu, Governor Ambode has raised the tempo of people-oriented governance with ongoing massive infrastructural projects dotting the entire landscape of the state. ‘As a cleric, I can proudly say God loves Lagos State and His unwavering love for the state has manifested in the quality of leadership in the state, with visible develop-

ment strides,” he said. The commissioner, who said that the network of roads in the state has remarkably improved under the current administration, added that with the construction of inner city roads and highways with lay-bys and bus stops, the face of traffic flow and management in the state has been redefined in a way that serves as a model for other states to emulate. “Travel time within the state has reduced. You will certainly see the improvement while driving on Lagos roads. I am sure driving and living in the state would be more interesting and enjoyable by the time several ongoing urban-renewal projects are completed. “Pedestrian bridges are springing up on highways to prevent residents from losing their lives while crossing the highways. Laybys are being constructed on major roads to also prevent indiscriminate parking by motorists, a practice which used to contribute to the traffic gridlock. “About 1000 bus-stops will soon be completed to ease traffic flow. The lay-bys and slip roads are constructed with installation of wire mesh fencing to bring out orderliness on our highways like never before,” he said.

Monday 25 June 2018

C002D5556

BUSINESS DAY

A13

A14

BUSINESS DAY

C002D5556

Monday 25 June 2018

Feature ‘I-invest will herald Nigeria’s evolution into a high-savings society’

ecently, Parthian Partners, a panAfr ican inter dealer-brokerage services firm collaborated with one of Nigeria’s leading commercial banks, Sterling Bank Plc, to deliver an innovative solution that makes it easy for all and sundry to invest in treasury bills (T-Bills) directly from their mobile devices. The fintech solution, a multi-platform software application known as I-invest, was purposely designed to promote investment culture among members of Nigeria’s middle-class who have a history of saving sparingly. Essentially, I-invest will enable Nigerians to invest in T-Bills from any location at their convenience. Chief Executive Officer of Parthian Partners, Mr. Seye Olusoga says the savings opportunity availed by I-invest can serve as a safeguard in cases of temporary job loss, sickness or early retirement. According to him, treasury bills are safe investments that guarantee healthy returns on investments and allow members of the public to invest in the development of Nigeria at little to no risk. He points out that investment in T-Bills is all about convenience. Currently, in order to invest in T-Bills, the potential investor must visit a bank of his choice, speak to an account officer, fill forms and deal with all sorts of verification requirements. But with I-invest, all that the investor needs is a smart phone and access to the internet, says Olusoga. He adds that “Armed with these, the potential investor simply downloads the Iinvest app from Google Play Store or App Store on IOS. He then follows the prompts on the I-invest app to complete

Seye Olusoga

the registration process at the end of which a personal account and unique customer identification are created for him. “He can then load a minimum of N100, 000 into his wallet to start investing. Once the wallet is loaded, the app makes it easy to select a tenor and pay the amount which the customer wants to invest in T-bills at the prevailing rate at the time of purchase.” The Parthian Partners CEO explains that the app makes investments easy by giving multiple options, from direct transfer to the use of a debit card. “Users can also pay via the e-bills platform on the internet banking portals of their respective banks. The e-bills mode of payment is efficient and quick and should be used more often than it is currently being used.” According to Olusoga,

on I-invest, treasury bills will be supplied by Sterling Bank and will be kept with a duly regulated custodian to ensure that customers’ investments are safe and secured. The I-invest app merely makes the process simple by cutting through the red tape, he says. He advises users to update their Know Your Customer (KYC) requirements on the app to avoid any delays in accessing their funds. He dispels the notion that the Nigerian market may not be ready for I-invest, saying Nigerians should never be underrated when it comes to the adoption of innovation and technology. “More and more people in the country have smart phones as well as access to the internet and we are seeing an increase in the use of apps and smart codes for

accessing traditional banking services, I-invest merely builds on that foundation.” He assures that I-invest will make investing more accessible to the average Nigerian unlike in the past when access to treasury bills and certain banking services were reserved for the elite or sophisticated investor. He explains that the expanded market for T-Bills has always existed, but it remained untapped because the innovation was missing. He says I-invest has buffers against the menace of identity theft and payment fraud because the app only allows transfers into accounts linked to users’ Bank Verification Number (BVN). This means that any money invested, or any gains made cannot be transferred to any unrelated account or third party. Despite the peculiar challenge of requisite infrastructure in Nigeria, Olusoga says Nigeria currently provides an enabling environment that grants a fair amount of latitude to innovators in the Fintech space. He adds that if it is sustained, new and innovative ways to circumvent challenges would be introduced by operators in the sector. According to him, the use of technology in banking and finance in Nigeria is quite advanced and in tandem with more developed countries. Consequently, he says, players in fintech will thrive and continue to make a difference despite the challenges. He says Parthian Partners is fully equipped to exploit this unique window of opportunity due to its wealth of knowledge in the industry as well as relationships established in the banking sector, such as its collaboration with Sterling Bank. He explains that the partnership with Sterling Bank is a collabora-

tive one with the customer in mind. “The two institutions came together to take fintech in Nigeria a step further than the traditional airtime purchase and money transfer services.” Olusoga asserts that the app will deepen the Nigerian money market and ultimately the economy because the more people invest in the app the bigger the money market will become. According to him, “T-bills are a means of lending to the government for infrastructure development, among other needs. With more money available to the government, the cost of funding projects will crash and become lower. So, with I-invest, more Nigerians are set to play their part in building the economy.” Explaining that customers of other banks are at liberty to use the I-invest app because it was not created for Sterling Bank customers alone, the CEO emphasises that I-invest was built for every Nigerian with a smart phone and internet access. The focus at this time, he says, is to get Nigerians to embrace the app first before introducing it to other African countries in the future. On the future of I-invest, Olusoga says, “We are entering unchartered waters and that is always exciting. Most importantly, we are changing the way things are done and putting the customer’s interest at the forefront. “Due to its convenient and secure nature, it will possibly herald Nigeria’s evolution into a high-savings society where the government will have access to low-cost funds to develop infrastructure and citizens having enough for the type of retirement they desire. I-invest is just about creating a future of shared prosperity for Nigeria and Nigerians.”

Politics & Policy Monday 25 June 2018

C002D5556

BUSINESS DAY

Obaseki hails Oshiomhole’s election, commends Odigie-Oyegun for purposeful leadership

do Sate governor, Godwin Obaseki, has hailed the election of his predecessor, Adams Oshiomhole, as the National Chairman of the All Progressives Congress (APC). Speaking after Oshiomhole was announced the elected National chairman of the APC at the party’s National Convention in the Federal Capital Territory, Abuja, on Saturday, Obaseki noted that “the former governor’s emergence is an acknowledgement of his people-centred leadership and his commitment to the advancement of the nation.” Obaseki who also congratulated other elected officials of the party, said, “We are very proud of Oshiomhole’s emergence as the National Chairman of our great party, the APC. He is adequately equipped to foster unity and provide a new direction for the party, as we move closer to the general elections in 2019.” He saluted the immediate past National Chairman of the party, John Odigie-Oyegun, for providing purposive leadership that brought the APC to global reckon after defeating the Peoples Democratic Party (PDP) in the 2015 general elections. The governor described OdigieOyegun as a worthy leader with honour, saying, “Chief John Odigie-Oyegun’s impressive rise to prominence was the product of a combination of hard work, humility and faith in God. “From his humble background, he was taught the inestimable value of hard work, integrity and a good name. “In the federal civil service, Chief Odigie-Oyegun distinguished him-

ggrieved members of the All Progressives Congress (APC) under the umbrella of new People’s Democratic Party (nPDP) have vowed that the group will continue with its agitations even after the party’s national convention held last weekend. In a statement issued by the leader of the nPDP, Kawu Baraje, Saturday evening, the group said:

Baraje

Kwankwaso visits Atiku, holds closed door meeting with ex-VP

L-R: Atiku Abubakar, former vice president and frontline PDP presidential hopeful, and Murtala Nyako, former governor of Adamawa State, when Atiku paid a condolence visit to the former governor in Yola over the recent demise of his wife on Sunday.

self and was propelled to the enviable position of a federal permanent secretary.” According to Obaseki, “Chief Odigie-Oyegun’s forthrightness, civility and decorousness garnered from his impressive years of service to our great country in the civil service, marked him out for higher national call to serve our country after his retirement from the federal civil service. “These sterling qualities earned him the confidence of Edo people, when they turned out in their numbers to entrust him with their mandate as the first Governor of Edo State, in the aborted third Republic, from 1992-1993.

“As a loyal and dedicated party man, his leadership qualities earned him the position of the National Chairman of the All Progressives Congress (APC), and under his leadership, the APC grew into the largest party in Nigeria and displaced the then ruling party, the People’s Democratic Party (PDP) from power at the centre, through popular vote in the 2015 presidential election.” Recalling the achievements of the former APC National Chairman, Obaseki noted: “In particular, the 2015 presidential elections marked a turning point in the political history of our great country and reset the destinies of over 180 million

APC convention: nPDP to continue agitations - Baraje SIKIRAT SHEHU, Ilorin

A15

“We want to appreciate the entire Nigerians and our supporters and we want to let them know that struggle is still on course and until the party addresses some the major areas of concerns that will make life easy for Nigerians we remain undaunted.” He clarified that they decided to attend the Saturday’s convention of APC because “they want to demonstrate to the world and entire Nigerians and particularly to their supporters that they are loyal

to the party.” He added that their attendance of the APC convention “does not mean that all the group’s griviances stated in their letter had been addressed. We still believe that our loyalty should be demonstrated, that was why we attended the convention “. Baraje noted that the convention was done “despite the fact that there are so many litigations in the court against the party arising from parallel congresses in over 18 states of the federation . According to the statement, “The fact that we were able to attend the convention is not an interpretation that the suffering of the masses had been alleviated and is not an answer that the security in the country which has been seriously jeopardised is being addressed. It is not a pointer to the fact that youth unemployment and human capital development are been addressed.” The nPDP leader said these are all the groups concern and warned that even if the APC convention went on smoothly, it is not yet huhuru because ” the foundation of the convention is shaky as there are so many aggrieved party members and stakeholders and the party is aware of this.”

Nigerians for greatness. “It was the first time since the return of democracy in 1999, that an opposition party would obliterate a “behemoth” ruling party. “Chief Odigie-Oyegun’s sagacity and wealth of experience helped in stabilising our great party during our most trying moments, when members of the decimated opposition wished us doom. “He is passing the baton of leadership of our great party, the APC, after successfully navigating the party out of troubled waters and making it stronger, stable and better prepared for the challenges of the future.

ormer Governor of Kano State, Rabiu Musa Kwankwaso Saturday night paid a courtesy visit to former Vice President of Nigeria, Atiku Abubakar at his residence in Asokoro, Abuja. Kwankwaso arrived Atiku’s residence at about 8.30pm and went into a closed door meeting with the former Vice President. The details of their meeting was not made public. The meeting lasted about 45 minutes. It was however gathered from a source close to the meeting that the visit of Kwankwaso was to pay Sallah homage to Atiku who was not in the country during the Eid El Fitr celebrations. The source said that both leaders also used the occasion of the visit to discuss the state of the nation. When contacted, Media aide to Atiku, Paul Ibe confirmed the visitation but declined to discuss details of the discussion between Atiku and Kwankwaso.

Kwankwaso

Oshiomhole’s emergence: APC now turbocharged to return Buhari as President – Obaseki

he Edo State governor, Godwin Obaseki, says the emergence of the immediate past governor of the state, Adams Oshiomhole as the National Chairman of the All Progressives Congress (APC), will turbo-charge the party and its various machineries to return President Muhammadu Buhari as President come next February. Governor Obaseki, who said this at the first elective National Convention of the APC in Abuja at the weekend, stressed that Comrade Oshiomhole’s vibrancy and experience as a negotiator, would prove instrumental in consolidating on the gains of the party in the country. According to Obaseki, “The APC is a collection of several parties and groups that came together to form a government. Haven formed a government, we now go to the next stage of consolidating our political hold. The right person to do that at this point in time is someone who has the kind of experience like Comrade Adams Oshiomhole.” He continued, “The meaning of

that is that we have a turbo-charged party that will lead us to elections and ensure that APC remains the leading party in Nigeria. “But more importantly, APC is now poised to change the life of Nigerians for good. This is going to turbo-charge the party; it will renew the structure and organs of the party for elections.” On his expectations for the new chairman, he said, “I expect that as soon as comrade gets into office early next week, we are going to have a process of healing and reconciliation of aggrieved parties. But more importantly, we are going to be redefining a direction which will ensure that our president is re-elected next February.” Oshiomhole emerged National Chairman of the APC after other aspirants for the position stepped down before the elections at the APC National Convention. He was governor for two-terms in Edo State, during which time, experts believe, he prepared the ground for the transformation of the state that Governor Godwin Obaseki administration is building on.

A16 NEWS

BUSINESS DAY

C002D5556

NCAA reaffirms sanctity of figures released, says no amount of blackmail can derail it IFEOMA OKEKE

igerian Civil Aviation Authority (NCAA) has reaffirmed the sanctity of the recently released statistical data on the aviation industry. Two weeks ago, the NCAA released figures on passenger traffic, tickets sold, number of engineers, cabin crew and pilots, among others. In a statement issued by Sam Adurogboye, general manager, public relations, NCAA, he said, “The figures are verifiable and no amount of push and shove can cast aspersion on our figures. The system and processes of generating and gathering data are in line with best practices and international standards. “All stakeholders and the public are therefore advised to resist all attempts to create

confusion and cast doubts on the figures. This is clearly a result of crass ignorance and the purveyors being too clever by half.” According to Adurogboye, the process of generating data is as stipulated in the Nigerian Civil Aviation Regulations (Nig. CARs) 2015 Part 18.12.5, “all domestic and international airlines operating in Nigeria shall forward to the Authority through an electronic platform provided by the Authority, all relevant documents such as flown coupons, passenger or cargo manifests, air waybills, load sheets, clients’ service invoices and other documents necessary for accurate billing within 48 hours after each flight.” He further explained that as part of the billing requirements, the authority collects billable data from airlines, photocopy of flown coupons and Post Departure Manifest

(PDM) of international flight operations. All these are International Air Transport Association (IATA) documents, which NCAA cannot influence. “The Flown Coupons contain specific information required by IATA before billings are done and issued. These are Ticket Number, Name of Passenger, Ticket Sales Charge (NG) etc. It is noteworthy that the prerequisite NCAA 5 percent TSC paid by passengers is indicated on the ticket. These data are warehoused by NCAA and can be verified. “The domestic billing process requires the airline to submit to the Authority its Passenger Departure Manifest (PDM) immediately after every flight departure. It is from the filed fares that 5 percent TSC is calculated. The automated Integrated System therefore ensures authenticity between NCAA server and airlines.

cepted by stakeholders.” Speaking on the theme, ‘The New National Code of Corporate Governance – A Framework for Good Practice,’ he stated that the code was a slightly complex topic and penalty for defaulters, and would be market-based penalties because the code represented standards of good cooperate behaviour. “If you fall short, you will need to report how you are performing to the market; so stakeholders will respond in different ways. To get to the level where a regulator will be coming with a big stick after you to impose a penalty; it will be that you have deliberately done the wrong thing, as against making honest effort at meeting a well-defined standard. “People might fall short for good reason, and the market will reward compliance. So, there is a market based incentive system and there will be greater benefit for those who

comply the most,” he said. However, on the position of the New National Code of Corporate Governance in regard to faith base organisations and not-for-profit, he said the new approach adopted by FRCN was a phase-byphase implementation of the good corporate governance standard. “This code is targeted primarily at the private sector; in terms of the suspended code, it was released in three parts; the private, public sector and non-for-profit and in terms of the approach the board adopted: we decided to do a phased implementation that deals first with the private sector that will cover about 80 – 90 % of the economy base of the country, he said. The FRCN executive secretary is however of the opinion that not-for-profit and faith base organisation will be revisited after the phased implementation of the code with private sector.

‘Market driven incentives to enhance good corporate governance’ SEYI JOHN SALAU

xecutive secretar y/ CEO, Financial Reporting Council of Nigeria (FRCN), Daniel Asapokhai, says market driven penalties and incentives will serve as check and balance for directors, especially in the private sector of the economy to perform optimally and enhance their adherence to good corporate governance practice in Nigeria. Asapokhai, who was a guest speaker at the Institute of Directors (IoD) Nigeria June 2018 new members’ induction ceremony, said, “The new code of practice is market driven.” According to Asapokhai, “Stakeholders raised some issues with the former code which led to government suspending the code, from January we have worked to look at the issues and we have addressed them, so the new code should be generally ac-

NLNG to boost domestic LPG supply with new LPG vessel

igeria Liquefied Natural Gas Limited (NLNG) says the company is planning to reinforce the domestic Liquefied Petroleum Gas (LPG) market with a new LPG vessel. The move will boost volume, availability, and increase consumption of the clean gas. Andy Odeh, the manager, corporate communications and public affairs of NLNG in a statement, said the new LPG vessel would be built by E.A Temile and Sons Company Limited, a wholly Nigerian company. Odeh said the managing director of NLNG, Tony Attah, at a contract signing ceremony in London on Thursday,

said that the signing ceremony was groundbreaking for NLNG. According to Attah, this will support the company’s aspiration to further help develop the DLPG market and promote the growth of indigenous companies and Nigeria’s economy. “NLNG remains the single largest supplier of Liquefied Petroleum Gas (LPG) (over 50%) in Nigeria and looks to enable its expansion in future. “We produce the LPG in our Plant in Bonny, Rivers State, Nigeria, and transport it by sea to Lagos from where it is distributed to every part of the country. “This assures the product availability, accessibility, and

affordability which is central to us as a company. “NLNG’s domestic LPG intervention scheme aligns with its business focus of bringing energy to the world and helping to build a better Nigeria.” Attah said that the company had contributed greatly to developing Nigerian Content policy. “We work closely with the Nigeria Content Development Monitoring Board to ensure compliance with the Nigeria Oil and Gas Industry Content Development (NOGICD) Act 2010, consequent upon which we signed a Business to Business Service Level Agreement (SLA) with NCDMB in June 2017.”

Monday 25 June 2018

Osun 2018: Ibiyemi, an asset to APC - Osun APC chairman

tate chairman, All Progressives Congress (APC), Gboyega Famodun, has described a governorship aspirant, Samuel Ibiyemi, as an asset needed by national ruling party to win the 2018 governorship election in the state. According to Famodun, Ibiyemi have the zeal and the commitment needed in the party. “We are in need of those with this kind of zeal in politics, with his past successes he will be successful.” Famodun stated during the declaration ceremony of Ibiyemi at the APC state secretariat in Osogbo that his wealth of experience in various leadership positions in the Nigerian Airforce made him an asset capable of disgracing opposition parties. He said the presentation on his programme is the first of its kinds among all aspirants who had expressed intention to contest for governor at the party secretariat since the commence-

ment of the election campaign. “We are impressed by his determination, his programmes for the state of Osun if giving the opportunity by the party and the electorate,” he noted. He however noted that ever since the creation of Osun State, Ife indigenes have been demanding for the position of governor. “I am delighted an Ife indigene can finally show the courage and commitment to contest at the state level. “I see love and togetherness in Osun with the way people turn out for Ibiyemi’s declaration ceremony. Ibiyemi is an asset,” Famodun noted. The party chairman observed that the experience of Ibiyemi in the public and private sectors of Nigerian economy as an entrepreneur is better than the consideration of money as basis for preference. He added that his service also at the national level volunteering to die

for Nigeria as a soldier is unequal among other aspirants. “We need him to serve in APC to bring his leadership qualities on board needed to promote the ideology of team work sustaining growth and development of the party,” he said. In an address made by Ibiyemi to party faithfuls at the secretariat, he promised to establish vocational training centres in each local government of the state to boost skill acquisition by secondary school leavers and university graduates. The programme listed in his plans for the state include creation of 40,000 jobs within four years, free education from primary to secondary school level, free health care for pregnant women, free health care for old age above 65 years, investment in agriculture and adoption of Information Communication Technology (ICT) as benchmark for competitiveness of youths in Osun for gainful employment outside the state.

BUSINESS DAY

C002D5556

NEWS YOU CAN TRUST I MONDAY 25 JUNE 2018

fivethings

Opinion

for your new week

Nigeria is Janus-faced on trade, but can’t have it both ways GLOBAL PERSPECTIVES

OLU FASAN Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

here is a paradox at the heart of Nigeria’s approach to trade negotiations. Here is a country that established a standing trade negotiating body, the Nigeria Office for Trade Negotiations (NOTN), and recruited one of the world’s leading trade experts as its chief trade negotiator, yet it’s very hesitant about entering trade negotiations and instinctively defensive when it does. The creation of such institutions would usually suggest that a country embraces trade openness and seeks greater integration with other economies through market access bargaining. But while Nigeria would like to export to other countries, its priority is to shield its industries from international competition. The Janus-faced, incoherent nature of Nigeria’s trade policy is misguided. You can’t pretend to be open to trade, but reluctant to negotiate trade deals or seek mainly to protect your market. Such mercantilist attitude doesn’t work in a world of reciprocity, where, as one scholar put it, “market access is the currency of trade negotiations”. If a country is not a valuecreator, bringing something to the table, it can’t be a valueclaimer, taking something away! There is, of course, the political economy of trade policies: the interplay of interests and ideas. Protectionist interests and ideas and in power struggle with liberal interests and ideas. This struggle is intense because free trade creates winners and losers. Although the losers, such as import-competing companies, are fewer that the winners, the losses are concentrated while the gains are dispersed. Thus, those who fear losing from trade openness have greater incentives to mobilise and lobby against it. Sadly, the forces of protectionism are often more powerful and more effective than the forces of liberalism. But this is where the state and institutions come in. Given that the economy and the wider society benefit from trade openness, in terms of economic growth and the maximisation of social welfare, the state should support free trade and resist protectionist interests. However, public choice theory tells us that government officials often pander to protectionist interests, and even harbour

protectionist sentiments. Thus, while the interests and ideas of economic actors and thinkers can shape trade policies, the interests and intuition of state actors matter even more, as the state ultimately decide! Which brings me back to Nigeria. And, here, the truth is that the forces of protectionism – protectionist interests, ideas and institutions – are strong in this country. Indeed, as the Economist magazine rightly puts it, “Free trade runs counter to political currents in Nigeria”. Even technocratic public officials who would normally hold liberal views have succumbed to protectionist pressures. You know that protectionist forces have won or are winning when otherwise technocratic ministers or government officials start to pooh-pooh the views of economic liberals as just “the theory”. Recently, the Trade Minister, Dr Okechukwu Enelamah, took a dig at me in an interview in BusinessDay of Monday, 11 June. Responding to a question on when Nigeria would sign the AfCFTA agreement, he said: “Many a times there are people in academia who just write these things, maybe from London Business School or School of Economics, LSE (an apparent reference to me) and all that”, adding, “and you know that is the theory”. The implication is that my writings on trade issues in this column are just “the theory” and should not be taken seriously! Well, allow me to digress a little and address the minister’s jab with

other countries. I advised and prepared UK trade ministers for EU council meetings on trade. So, my views are not just “the theory”, they are also based on my experience of seeing how trade policies and negotiations work in practice; of seeing many countries, including the former communist states of Eastern Europe, aggressively pursuing free trade policies and negotiating free trade agreements because they believe that trade openness and deeper integration into regional and global markets would help their economy grow faster and generate greater prosperity for their people. Now, my second point: what’s even wrong with theory? As John Maynard Keynes famously said, “Ideas are more powerful than is commonly understood. Indeed, the world is ruled by little else”. No serious country ever develops its trade policy without intellectual influences, without inputs from academic experts. Anyone interested in the intellectual history of free trade knows that ideas about the static and dynamic efficiency gains of trade have hardly changed since Adam Smith and David Ricardo propounded them centuries ago. Of course, as I said earlier, free trade creates winners and losers. But this, too, was recognised centuries ago, and led to John Stuart Mill’s “compensation principle”, advocating support for the losers. What’s more, these ideas or theories have been em-

It is unconscionable that Nigeria, where nearly 70% of the people live on below $1.25 a day, does not embrace free trade as a tool to alleviate poverty and deliver better standards of living through lower prices and greater choice two points. The first is that I do not just write from a theoretical basis, I write based on experience and evidence. I was a senior trade adviser with the UK Government. I represented the UK at the weekly meeting of the EU Trade Policy Committee in Brussel. I sat every week at the table with representatives from other 27 EU member states to discuss and shape EU trade policies and negotiations. I remember attending a meeting of the like-minded states in Copenhagen to help lay the foundation for the launch of negotiations on the EU-US Transatlantic Trade and Investment Partnership (TTIP). I provided legal and policy inputs, from a UK standpoint, into EU free trade agreement (FTA) negotiations with India, Japan, Mexico and many

pirically tested repeatedly and found to be valid. Trade openness, the evidence shows, boosts GDP growth through efficient allocation of resources; promotes economic dynamism through access to advanced technologies and innovative ideas, which enhance productivity and competitiveness; and, of course, provides better access to external markets. Above all, as a joint World Bank/World Trade Organisation report shows, free trade is a powerful tool for poverty reduction. It is unconscionable that Nigeria, where nearly 70% of the people live on below $1.25 a day, does not embrace free trade as a tool to alleviate poverty and deliver better standards of living through lower prices and greater choice. Recently, Nigeria’s chief trade negotiator and DG of

NOTN, Dr Chiedu Osakwe, tweeted some positive comments on trade. One said: “Countries that are open to trade grow faster and generate more jobs than countries that are closed up”. That’s not theory, it’s an evidence-based fact. Unfortunately, that view doesn’t reflect the policy reality in Nigeria. Every flagship economic policy document in Nigeria, such as the Nigeria Industrial Revolution Plan and the Economic Growth and Recovery Plan, describes import substitution as the main goal of Nigeria’s trade and industrial policies. What this means, of course, is more trade protection – import prohibitions, high tariffs and other restrictive measures, all of which contribute to the complexity and opaqueness of Nigeria’s trade regime. In her book, Reforming the Unreformable, two-time finance minister and coordinating minister for the economy, Dr Ngozi Okonjo-Iweala, said: “In Nigeria, the trade regime is politicised, with different business groups and their political backers interfering in the setting of tariffs and even asking for the implementation of nontariff barriers to benefit their businesses”. Of course, that protectionist environment has hardly changed. Now, international agreements are usually the means of locking in domestic reforms and shaping the constraints and opportunities that economic actors face. But Nigeria was viscerally defensive in the negotiations on the ECOWAS Common External Tariff (ECOWAS CET), the EU-West Africa Economic Partnership Agreement (EPA) and the African Continental Free Trade Area (AfCFTA). So far, the government, captured by protectionist forces, has not ratified or implemented these agreements. It argues that they would lead to more imports and expose Nigeria’s “fragile” industries to fierce international competition. Of course, no country ever abandons its industries, but import substitution and infant industry arguments for protection are misguided. Since Nigeria has been protecting its “infant” industries, how many of them have grown out of infancy? None. Supply-side constraints, not international competition, are the bane of Nigerian industries. Address that, and there would be significant progress. Unfair trade, such as dumped imports, must, of course, also be tackled through normal trade remedies routes. But, let’s face it, Nigeria can never develop or industrialise by avoiding free trade agreements or shielding its industries behind protectionist walls. It would simply create inefficient, zombie industries. That would harm the economy and reduce general welfare. If “that’s the theory”, well, I am in good company!

Fascinating business facts

s if the rollback of rich-world monetary stimulus and a U.S.-China trade war weren’t enough, some key emerging markets are about to run the gauntlet of potentially game-changing elections. Political risk poses another headwind to developing-nation stocks that are heading for their worst quarter since the mid-2015 crisis over a China hard landing, with the MSCI Emerging Markets Index down more than 7 percent. Goldman Sachs Group Inc. said in a note this week elections in Brazil and Mexico leave the bank shy of the real and peso, with “political clarity required to unlock” value in the currencies. Turkey goes to the polls June 24, with President Recep Tayyip Erdogan -- who’s pressed for lower interest rates -- battling for reelection. Mexico and Indonesia also contest in the next two weeks. Colombia has already passed its election hurdle, with market-favorite Ivan Duque’s victory this month helping make the peso the best-performing emerging currency so far in 2018. There are also elections planned in Nigeria.

60%

he top two cocoa growers’ plan to work together to exert more control over global prices will face a key test in just over three months. Ivory Coast and Ghana, which produce about 60 percent of the world’s cocoa, have indicated they’ll coordinate their farmers’ price announcements for the new season that starts in October. If they can achieve that, analysts say it will bode well for other, more ambitious plans to coordinate bean sales and manage exports.

ambia has shortlisted 10 regional and international companies to build a total of 100 megawatts (MW) of solar electricity projects by 2020, the director of the project said on Friday. Zambia is heavily dependent on hydropower and following a drought in 2016, an electricity shortage hit Africa’s No.2 copper producer, forcing it to ration power supply to the mines. The country has since embarked on a policy to diversify to renewable forms of energy to ensure security of electricity supply.

$2.6bn

he Revel hotel and casino had been sitting empty on Atlantic City’s boardwalk, a bleak symbol of real estate failure rather than the glittering resort it was built to be. Bruce Deifik a property investor decided to take control of it sight unseen. Deifik, based in Denver who’d never been to Atlantic City, got a call in May 2017 from a friend seeking $5 million to help two developers revive the casino. Four days later, he agreed to double that amount and take over their effort. By January he was the majority owner, part of a group with $200 million on the line. Now he’ll see if the gamble pays off. The Revel has been refurbished and renamed Ocean Resort Casino, opening on June 28. Deifik is trying to overcome the history of a $2.6 billion property that was conceived more than a decade ago by Morgan Stanley to offer an antidote to the old, dark, smoke-filled casinos further down the boardwalk.

70%

s the rest of the world catching up with the leading countries? That depends. If you are talking about economic productivity, the answer is unclear. If you are talking about football results, may be. But that is another story. When poor countries grow quickly, people escape from poverty and global inequality tends to fall. So if convergence was the natural state of affairs it would be good news. Alas, in the words of economist Dani Rodrik: “empirical work has not been kind to this proposition”. The crude historical fact is that the world economy sharply diverged between 1820 and 1990, with today’s rich nations expanding their share of world income from 20 per cent to 70 per cent.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08022238495 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.